Giving Tuesday is a good time to remind everyone of the $300 charitable deduction available for 2021 to a taxpayer that doesn’t itemize deductions. The deduction is $600 for a married couple filing a joint return.

Here is a link to an IRS article with more information on the special deduction:  https://www.irs.gov/newsroom/year-end-giving-reminder-special-tax-deduction-helps-most-people-give-up-to-600-to-charity-even-if-they-dont-itemize

Now is also a good time re-visit other ways to maximize the tax benefits of charitable giving.

Qualified Charitable Distribution for age 70.5 and Older

For those taxpayers age 70.5 and older with an IRA, a Qualified Charitable Distribution (QCD) may make sense, especially for those that do not itemize their deductions. A distribution direct to charity from the IRA does not count as income to the taxpayer (and there is no deduction for the gift). Refer to the webinar recording in the final paragraph for more information on this. A QCD can count toward fulfilling an individual’s required minimum distribution.

Year-End Strategies

As we look beyond Giving Tuesday and turn to year-end tax planning, there are additional considerations and tips to maximize the tax benefits of charitable gifts for charitably inclined taxpayers.  A well-thought-out charitable gifting plan could yield significant tax savings. For example, donating appreciated securities to a donor-advised fund can be a great solution for certain taxpayers. Front-loading future years of charity to surpass the standard deduction may make sense. Also, front-loading charity in the final year of high income (e.g. before retirement) could be a very wise tax move. Combining a Roth IRA conversion with additional charity is another idea.

DHJJ Advisors

DHJJ assists clients with tax strategies like charitable giving, donor-advised funds, and qualified charitable distributions.