Over the next four weeks, we will be diving into the topic of philanthropic planning. We will be covering important topics related to charitable giving, different types of gifting strategies, and of course, the specific financial benefits that come with donating to nonprofit organizations. In this first article, we will provide a general overview of charitable giving strategies. We will talk about how to take advantage of some of these tax-advantaged strategies before the end of 2023, as well as how to incorporate charitable giving into your 2024 financial plan.
Before we get into the financial aspects of charitable giving, let’s discuss the personal and emotional benefits associated with giving back. It feels good to donate money, services or financial assets to charitable organizations. Plus, you can do a lot of good for those who may need help, while building a positive reputation in your community. You can contribute to your favorite nonprofit organizations and causes that mean something to you. These might be charities, local nonprofits, churches or other recipients that allow for tax-deductible gifts. You may also incorporate tax-free monetary gifts to family members.
Charitable contributions are also not just limited to giving cash donations. You can donate appreciated stocks, real estate and other assets that will bring value for the recipient organization. There are trusts, donor-advised funds, private foundations and other financial structures you can used for better control over your charitable giving strategies. You can give on a personal level, as well as through your company if you are a business owner. We will be getting into a few of these over the course of this article series, so stay tuned to the Illumination Wealth Blog throughout December.
Yes, it sure feels good to give back and support your causes. In addition, there are significant tax advantages that come with charitable giving. When done properly, these gifts will allow for excellent tax deductions. You can write off a significant portion of the value of anything you give that is eligible for deduction.
A key part of charitable giving is reducing your taxable income. Whether your giving is done through your business or as an individual taxpayer (or a combination of both), you will be able to lower your adjusted gross income (AGI) for the tax year. This may drop you down into a lower tax bracket and provide significant tax savings. It may increase how much you get back with your tax return, or at least minimize what you may still owe when tax season rolls around.
As 2023 comes to a close, it may not be too late to incorporate some tax-smart charitable giving strategies before the end of the year. Explore your options and look for opportunities to make donations of money or financial assets. Talk with your financial advisor or tax planner to make the right moves before it is too late.
Next, you will want to look for ways to implement charitable giving into your 2024 financial plan. It may be something you can implement year-round for maximum impact in your community and on your taxes. It may be more difficult to make large donations at the end of the year, but more feasible when spread out across an entire fiscal year.
For help with all your charitable giving and tax planning strategies as an individual and/or business owner, contact Illumination Wealth. Speak with one of our trusted financial experts. Make some key year-end moves while planning for a brighter 2024 and beyond.