The theme this week on the Retirement Quick Tips Podcast is: Analyze Your Tax Return Like A CPA.

Today, I’m talking about using your tax return to be more strategic and potentially save a lot in taxes with your charitable giving strategy.

If you are currently donating cash to charities, but you have significantly appreciated assets with large gains, there may be a better way. 

If you claim the standard deduction but you still gave $1,000 a month to charities last year, you’re not even getting a tax benefit for that. 

A few of solutions to this come to mind:

1. Look at your appreciated assets. Those can be gifted and the charity can sell it without paying the tax on the gain. You won’t pay the tax on the gain either. A win-win!
2. Consider contributing directly out of your IRA to charities, in what’s known as a qualified charitable distribution. This works best when you’re 72 and subject to required minimum distributions from your IRA, and it’s my preferred way for clients to give to their charity or church of choice once they’re taking RMDs.
3. The third strategy involves charitable bunching, where you cram 2 or 3 years of giving into 1 year which could allow you to itemize in that year where you give more. 

There are other strategies, too, like using a donor-advised fund and funneling your gifting through that, and then there are more advanced giving strategies that an estate planning attorney can help you set up, but the key here is that your tax return, the way in which you give to charity, and how those gifts are benefitting you and your tax situation could help you identify better ways to give that could also reduce the taxes you pay. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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