Maximizing Tax Savings through Charitable Contributions

Let us help you realize the Maximum allowed real estate donation tax deduction

Charitable giving is a powerful force for good in our communities, with U.S. families and individuals donating an average of over $1 billion to charity every day, according to Giving USA. The value of giving is also recognized by the U.S. tax code, which provides a variety of tax incentives to support those who wish to use their funds to do good. By understanding the tax strategies related to charitable contributions, individuals can optimize their giving to provide the maximum amount to charity while also receiving the maximum tax deductible advantages .

Donating long-term appreciated assets, such as bonds, stocks, or real estate, can be a highly effective way to give to charity while minimizing tax liability. When these assets are donated, the individual generally does not have to pay capital gains tax, and they can take an income tax deduction for the full fair-market value of the asset, up to 30% of their adjusted gross income. This can be a significant tax savings, especially for individuals with highly appreciated assets.

Another strategy for maximizing tax savings is to “bunch” charitable contributions into a single year, allowing individuals to surpass the standard deduction threshold and itemize their deductions. In off-years, they can take the standard deduction. This strategy can be particularly effective when combined with a donor-advised fund, which allows individuals to make a charitable contribution and receive an immediate tax deduction, then recommend grants to charity over time.

Estate planning is another important consideration when it comes to charitable giving. By naming our charitable organization as a beneficiary of one’s will, insurance policy, retirement plan, or trust, individuals can reduce or even eliminate the burden of estate tax for their heirs. Additionally, charitable trusts and careful selection of assets for distribution to various beneficiaries can help minimize estate tax liability. For example, leaving an IRA to charity and appreciated securities to individuals can allow heirs to inherit more due to the differences in how these assets are taxed.

Donor-advised funds are another valuable tool for charitable giving. These dedicated accounts for charitable giving allow individuals to contribute assets, receive an immediate tax deduction, and then recommend grants to charity over time. The funds can also be invested for tax-free growth, providing a powerful way to maximize the impact of one’s giving. Donor-advised funds offer many benefits, including income, capital gains, and estate tax advantages, making them a popular choice for individuals looking to optimize their charitable giving.

By using these tax planning strategies, charitable contributions can reduce three kinds of federal taxes: income, capital gains, and estate taxes. Income tax strategies, such as donating to 501(c)(3) public charities, can minimize overall tax liability. Capital gains tax strategies, such as donating long-term appreciated assets, can reduce capital gains tax liability. Estate tax strategies, such as using charitable trusts and careful asset distribution, can minimize estate tax liability.

In addition to these strategies, individuals can also consider other ways to maximize their charitable impact. For example, donating appreciated assets, such as private business shares, before sale can dramatically increase charitable impact. Leaving IRAs to charity and appreciated securities to individuals can also optimize inheritance. By consulting a tax professional and using the proper tax planning strategies, individuals can ensure that their charitable contributions are making the maximum impact possible.

Donate Real Estate to our 501c3 non-profit today! Call 888-228-7320 to Donate Real Estate and enjoy a Current Market Value Tax Deduction while helping worthy causes throughout the USA!

Tax Strategies for Charitable Contributions

• Donating Long-term Appreciated Assets: Donate assets like bonds, stocks, or real estate to avoid capital gains tax and deduct the full fair-market value (up to 30% of adjusted gross income).
• Bunching Deductions: Combine multi-year deductions into one year to surpass the standard deduction threshold, then take the standard deduction in off-years.
• Estate Planning: Name a charitable organization as a beneficiary of your will, insurance policy, retirement plan, or trust to reduce or eliminate estate tax.
• Donor-Advised Funds: Contribute to a dedicated charitable giving account, like Fidelity Charitable, for an immediate tax deduction and tax-free growth.

Reducing Taxes through Charitable Giving

• Income Tax Strategies: Donate to 501(c)(3) public charities for an itemized deduction, reducing overall tax liability.
• Capital Gains Tax Strategies: Donate long-term appreciated assets to reduce capital gains tax liability (up to 20%).
• Estate Tax Strategies: Use properly structured gifts and donations to remove assets from your estate, reducing estate tax liability.

Additional Tips and Considerations

• Consult a tax professional for complex estate planning strategies.
• Use a Charitable Giving Tax Savings Calculator to estimate your savings.
• Consider donating appreciated assets, like private business shares, before sale.
• Leave IRAs to charity and appreciated securities to individuals to optimize inheritance.