As we head into a season that is typically full of charitable fundraisers and philanthropic events, you may be thinking about establishing your charitable giving structure. While you may have determined which causes and organizations you would like to support, the next step in maximizing your giving is creating a plan around the financial and tax aspects related to your monetary contributions.
Here are some elements to consider while establishing your charitable giving structure:
- Determine tax-deductibility: Charitable donations may help you reduce your tax bill, but not all organizations are eligible for tax deductions. To qualify, an organization must be established for religious, charitable, educational, or other specified purposes that meet specific requirements defined by the IRS. You can also give to many international organizations and crowdfunding platforms by following established guidelines.
- Determine which assets to give: Although cash and checks are among the most popular ways to give, consider donating appreciated non-cash assets such as publicly traded securities, real estate, or private business interests. Donating these assets can unlock additional funds for charity and may reduce your tax liability. For example, donating assets rather than selling them yourself and donating the proceeds can potentially eliminate the capital gains tax.
- Select your charitable giving vehicles: Research the different types of giving vehicles to determine which vehicle or combination of vehicles best aligns with your goals. While tax considerations are important, consider other factors such as the complexity of your giving and potential administrative burden. For example, unlike donations to limited liability companies, contributions to a donor-advised fund account can typically be invested for potential growth, tax-free, to increase your charitable impact.
Maximizing your giving, for both you and the organizations you choose to support, begins with defining a strategic plan. If you would like to learn more about types of charitable organizations, the characteristics of common giving vehicles, or the guidelines for donating different non-cash assets, we’re here to help.
**All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. Axxcess Wealth Management, LLC and its advisors do not provide legal, accounting, or tax advice. Consult your attorney or tax professional. Representatives have general knowledge of the Social Security tenets. For complete details on your situation, contact the Social Security Administration.