As the year draws to a close, it is the perfect time to reflect on your charitable giving and explore ways to maximize both your impact and tax benefits. At Park City Wealth Advisors, we understand that philanthropy is deeply personal, and the right giving strategies can not only support the causes you care about but also align with your broader financial goals.
In this blog, we’ll explore smart tax moves for philanthropy that can help you optimize your charitable giving before the year-end, helping you to make the most of both your generosity and your financial strategy.
Smart Tax Moves for Philanthropy
Whether you are looking to make a one-time gift or plan for the future, these strategies can help you give with purpose and save on taxes:
Maximize Your Deductions with Donor-Advised Funds (DAFs)
A Donor-advised fund (DAF) is a powerful tool for making smart tax moves for philanthropy, allowing you to contribute to a charitable account in your name.
Donor-advised funds offer not only immediate tax deductions when you make a contribution before December 31st but also the flexibility to direct those funds to the causes you care about over time.
By strategically timing your donations, you can maximize your tax benefits while helping your philanthropic efforts align with your long-term financial goals. A DAF lets you make thoughtful, meaningful contributions while also giving you control over the timing of your gifts, making it an ideal option as you plan your year-end giving.
Leverage Appreciated Assets for Giving
Donating appreciated assets like stocks, bonds, or real estate is one of the popular smart tax moves for philanthropy. Rather than selling appreciated assets and paying capital gains taxes, you can donate them directly to charity, avoiding those taxes and potentially receiving a deduction based on their fair market value on the day of the donation.
Donating appreciated assets not only maximizes the impact of your contribution, but by donating before the year ends, you can lock in a deduction for the current tax year, making your generosity even more rewarding both emotionally and financially.
Bunch Your Charitable Contributions
There are even smart tax moves for philanthropy for those who typically give to charity each year but fall below the standard deduction threshold. One powerful strategy is “bunching” multiple years’ worth of charitable contributions into a single tax year.
By bunching your charitable contributions, you can potentially exceed the standard deduction and itemize your deductions, leading to a larger tax benefit for the year. Concentrating your charitable contributions allows you to spread your giving over time while maximizing the impact of your generosity—and reaping the full tax advantages in just one year.
Bunching your charitable contributions is an emotional and impactful way to make a difference while making the most of your charitable giving during the year-end season.
Charitable Gift Annuities
A Charitable Gift Annuity (CGA) offers a heartfelt way to support the causes that matter most to you while securing your financial future. By making a donation to a charity, you not only make a substantial impact but also receive a fixed annual income for life, creating a win-win for both you and the charity.
As part of this smart tax move for philanthropy, you may qualify for an immediate income tax deduction, and a portion of the income is often tax-free. This year-end, a CGA can help you meet your charitable goals while providing a predictable income stream, helping your legacy to live on while benefiting from long-term tax advantages. Charitable gift annuities are an opportunity to give meaningfully today and enjoy the rewards for years to come.
Plan Smart Tax Moves for Philanthropy with an Advisor
At Park City Wealth Advisors, we understand that charitable giving is not just about making a donation—it's about making a lasting impact that aligns with your financial goals and personal values.
If you are uncertain about the best strategies to optimize your philanthropic efforts, our team of philanthropic advisors is here to help. We can work with you to create a customized giving plan that maximizes tax benefits and helps your donations have the greatest impact.
Whether you are planning a one-time gift or structuring a long-term giving strategy, we will guide you through the complexities of tax laws and help you make thoughtful, meaningful contributions.
Reach out to Park City Wealth Advisors today and let us help you craft a philanthropic plan that works for you and the causes you care about.
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