Four ways to give to charity while saving on taxes
Did you end up with an unexpected tax bill this April? Start planning for next tax season and discover how you can donate to charity and fight poverty while saving on taxes.
BY DAVIS CONNELLY
Did you end up paying unnecessary taxes this April due to appreciated securities or income from your retirement fund? Do you want to ensure that you are putting your hard-earned dollars where you see fit come April 15th next year?
If you start planning ahead now, you can minimize your taxes next year while supporting your favorite charity. Discover four ways you can donate to charity and fight global poverty — all while reducing your personal tax bill.
Disclaimer: We are not tax advisors! Consult yours to find the best tax-advantaged giving plan for you.
Learn more: Discover all the ways you can support families facing poverty.
1. Donate stock to balance your portfolio and reduce your capital gains taxes.
Have some of your assets appreciated more than others, throwing your diverse portfolio out of balance? Consider balancing out your portfolio by donating securities to charity.
Donating stocks can help balance your portfolio while reducing or even eliminating your capital gains taxes. Plus, not only does donating an appreciated asset help you save on taxes — it also maximizes your impact for your favorite charity.
Learn more: Find out how you can donate stock to save on taxes and amplify your impact.
2. Donate your IRA income to your favorite charity and reduce your tax burden.
Taking advantage of qualified charitable deductions can lower your adjusted gross income, potentially dropping you into a lower tax bracket. And while withdrawals from traditional IRAs are considered taxable income, charitable deductions are not.
If you have income from an IRA, charitable deductions can satisfy some or all of your required minimum distributions. And, for those who itemize their dedications, charitable distributions do not count towards toward your maximum allowable deduction, allowing you to deduct more from your income.
That means you can reduce your tax burden while supporting your favorite charity.
3. Plan ahead to lower your tax liability for up to five years.
Taxpayers can give up to 60 percent of their adjusted gross income in cash donations and 30 percent in non-cash gifts each year. But if your annual charitable deduction exceeds those limits, you can carry the excess amount forward for up to five additional tax years, lowering your tax liability for years to come.
If you have a lot of money available to give to charity this year, consider talking your tax advisor about lowering your tax liability for up to five years while maximizing your impact for your favorite charity.
4. Name your favorite charity in your will, trust, or life insurance policy to reduce taxes and expenses and make a sustainable impact.
Legacy giving is a great way to support your favorite organization because you can bequeath funds that may not be accessible in your lifetime while making a sustainable impact for people experiencing poverty. Plus, your planned giving choices can lower your income taxes and estate taxes, and may help you bypass additional expenses like probate costs.
If you are considering giving to charity after your lifetime, consider leaving assets that generate taxable income, like your IRA, to a charity, while leaving nontaxable assets like property or stocks to loved ones.
Leveraging a tax-smart, balanced estate plan can benefit your family and loved ones while supporting your favorite cause, like helping lift countless people out of poverty with BRAC.
Take the next step to support people living in poverty.
BRAC’s dedicated donors and supporters enable us to reach 100 million people experiencing poverty with the skills, services, and support they need to rise above it. Join them: Maximize your impact and plan your charitable giving today. Your contribution is not just tax-efficient: It directly creates opportunities for mothers, children, smallholder farmers, students, small business owners, and more.
Davis Connelly is External Affairs Manager at BRAC USA.