With just a few days left in 2023, it’s a good idea to familiarize yourself with several important year-end charitable giving techniques and deadlines so you can be prepared for conversations with your attorney, accountant, and financial advisor, as well as the team at the Carbon County Community Foundation.
Standard Deduction Reminders: The 2023 standard deduction for single taxpayers ($13,850) and married filing jointly ($27,700) is up nearly 7% over 2022. While this increase allows for more relief from income tax for most filers, it also sets a higher bar to exceed for those who itemize deductions. Keep your household’s standard deduction amount in mind when you tally your deductible expenditures, including your gifts to charity.
Bunching Donations: If you’ve had unusually high income or gains this year, you can “bunch” your future annual gifts into a single contribution to a Donor-Advised Fund at the Community Foundation. “Bunching” means you are “front-loading” charitable donations into the current year, knowing that you plan to make these donations in future years. By structuring a large year-end gift to your Donor-Advised Fund at the Community Foundation, you could surpass the standard deduction threshold to further reduce your taxes in 2023. You can recommend grants from your fund over the next few years to the nonprofit organizations you typically support, maintaining the level and timing of your usual giving.
Contributions of Appreciated Stock: Don’t automatically reach for your checkbook! A gift of long-term appreciated stock is one of the easiest and most tax-savvy ways to contribute to an organization. Donors receive a charitable income tax deduction for the fair market value of the stock and avoid paying the capital gains taxes that would be incurred if the stocks were sold. Similar to bunching donations, you can gift the stock to the Community Foundation to establish a Donor-Advised Fund, and we will help distribute grants to nonprofits on your behalf. Contact us for the information your broker will need to process the gift.
Qualified Charitable Distributions From Your IRA: Individuals over age 70½ can satisfy the Required Minimum Distribution (RMD) requirement by donating up to $100,000 from their IRA. That means you avoid income tax on the funds distributed to charity. There are limitations on what type of fund can accept this type of gift, so we can help you determine the best option to fit your goals.
Don’t Miss Year-End Deadlines: If you’re sending a check, your donation must be postmarked or hand-delivered no later than December 31. Gifts of marketable securities also need to be fully transferred by December 31, so please work with your advisors to contact us in plenty of time for our team to process and receive the transfer.
Contact the Carbon County Community Foundation now to initiate any of the above strategies before the end of 2023.
Looking Ahead:
Fingers crossed on deduction legislation. Keep an eye on the Charitable Act, which, if passed, would permit a deduction for charitable gifts that exceed the standard deduction. The Charitable Act proposes to restore the pandemic-era “universal charitable deduction” and raise the cap from $300 for individuals ($600 for joint filers) to approximately $4,600 for individuals ($9,200 for joint filers). This could be a game-changing incentive for your favorite charities–and for you!