Maximizing Charitable Impact and Tax Benefits as the Year Ends - Kerr Financial
Maximizing Charitable Impact and Tax Benefits as the Year Ends
Category: Family Office, Financial Planning, Investment Management Tags: AMT, Capital Gains, Charitable Foundation, Charitable Giving, Donation, Donor Advised Funds, Family Giving, Foundation, Minimum Tax, Tax Savings, year end planning

Maximizing Charitable Impact and Tax Benefits as the Year Ends

Charitable giving is a wonderful way to support communities and causes that are important to us. Beyond the financial aspect, our donations reflect our values and causes that are important to us. As the year comes to a close, and as we gather with family and friends, it’s a great opportunity to consider the impact of our contributions. This article provides some helpful insights and considerations to make your charitable efforts as effective and beneficial as possible.

Strategic Charitable Giving with Donor Advised Funds and Personal Charitable Foundations

In a high-income year, consider enhancing your charitable impact through Donor Advised Funds (DAFs) or by setting up a personal charitable foundation. Both of these foundations allow for an immediate tax receipt and the flexibility to distribute funds over time. Personal foundations, while more involved, offer greater control and a lasting family legacy. Both provide significant tax advantages and enable sustained charitable giving.

The Advantage of Year-End Donations

Don’t overlook the benefits of making charitable donations before December 31st. Donations made before the end of the year will qualify for a tax credit, reducing your tax bill or increasing your refund. In many situations, you could save over half of your donation’s value in taxes. Remember, charities can provide electronic tax receipts instantly, even for donations made on the last day of the year.

Gifting Securities: A Wise Choice

For a tax-efficient way to give, consider donating publicly-traded securities, like shares or mutual funds with accrued gains. This method allows you to bypass capital gains tax and receive a tax receipt for the full market value. To ensure your gift is processed by December 31st, start the donation process well in advance.

Be Aware of Upcoming AMT Rule Changes

If you’re planning substantial donations, keep an eye on the proposed changes to the Alternative Minimum Tax (AMT) rules, effective January 1, 2024. These changes could impact the tax benefits of your charitable contributions, especially for in-kind donations of securities.  If you are considering donations of securities, you should speak to your advisor to review whether you should consider making additional donations ahead of the proposed changes.

Make Your Giving Count

Whether you’re considering a one-time donation, setting up a Donor Advised Fund, or establishing a Charitable Foundation, your charitable giving can make a significant difference. If you need advice or more information on how to optimize the impact of your donations, our team is here to assist you. We specialize in helping individuals like you make the most of their charitable contributions, ensuring your generosity is both impactful and financially wise.

Kerr Financial

About Kerr

Kerr Financial Group was formed in 1979 for the purpose of assisting individuals to maximize their personal financial resources, alleviate their financial and retirement concerns and simplify the administration of their affairs.

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