YEAR END CHARITABLE PLANNING

The RAF is fortunate to have a deep bench of talent. This article is written by CPA Bruce “Sparky” Parker, who volunteers as the RAF Idaho Liaison.

Here Sparky shares some beneficial year-end tax planning/donation strategies to think about. These ideas will work for any of your favorite charities. If you wish to include the RAF, we are standing by to help.

Get the Best Benefit from Charitable Donations
For tax year 2023 the federal standard deduction is $27,700 for married couples and $13,850 for single filers. Many people don’t have enough itemized deductions to top those thresholds and get any tax advantage for their charitable donations. Here are some alternatives to get tax benefits from your donations. 

The “Double Dip” tax benefit
Donating appreciated assets that have unrecognized taxable gains, such as publicly traded stocks, can be a tax efficient strategy. You don’t have to recognize the taxable gain. If you are able to itemize deductions, you can deduct the fair market value of the stocks you donate, regardless of your cost basis. This effectively results in a double dip tax benefit. 

Get a tax benefit even if you don’t itemize 
If you are 73 years or older and have an IRA, you are most likely required to take taxable distributions each year. Making a “Qualified Charitable Distribution” out of your IRA account(s) to eligible charities, satisfies part of your required annual minimum distribution, while excluding that amount from taxable income. You get a tax benefit even if you don’t itemize. 

Use your IRA to reduce your Medicare premium
By donating directly to the charity from your IRA, your AGI is lower which could reduce your Medicare premium adjustment.

Qualify for Itemized Deduction benefits
If you are close to but below the standard deduction threshold, consider skipping charitable donations in a year, then double your donations the succeeding year, thereby exceeding the standard deduction every other year. 

Employer Match doubles your donation
Many employers have matching charitable gift programs. Check with yours to see if it is available for you. 

Ask your tax professional or financial advisor about these strategies to ensure they meet your individual financial and charitable goals.

Bruce ‘Sparky’ Parker, CPA
bparker@theraf.org