Five Tips For Charitable Giving

In addition to supporting the work of the organizations and causes you care about, charitable giving can be advantageous from a tax perspective. To ensure that you and the organizations you support reap the full benefits of your generosity in 2024, consider the five tips below. But don’t delay – important year-end deadlines are right around the corner!

1. Determine if you can itemize on your return
In 2024, taxpayers can deduct up to 60% of their adjusted gross income (AGI) for charitable donations made in cash, and up to 40% for donations of appreciated stock or property. However, you must itemize on your 2024 tax return to be eligible to deduct charitable donations.

Not sure if you can itemize in 2024? According to the Internal Revenue Service (IRS), if the total amount of your allowable itemized deductions on Schedule A (Form 1040) is greater than your standard deduction you should itemize. For 2024, the standard deduction is $14,600 for individuals and $29,200 for married couples. Taxpayers aged 65 and over may claim an additional standard deduction of $1,950 for single filers and $1,550 for joint filers.

Itemized deductions, subject to certain dollar limitations, include amounts you paid for state and local income or sales taxes, real property taxes, personal property taxes, mortgage interest, disaster losses, gifts to charities, as well as qualified medical and dental expenses exceeding 7.5% of your adjusted gross income (AGI).¹

2. Consider bunching deductions
If giving to charity is an important part of your financial strategy, but you don’t have enough combined deductions to itemize, you may want to consider a strategy called “bunching.” Bunching several years of donations into the current tax year may enable you to itemize and take the deduction this year.

One of the easiest ways to bunch deductions is through a donor advised fund or DAF. A DAF is a charitable investment account that allows you to make donations to your fund, receive an immediate tax-deduction, and then make grants from the fund to the charities you support over time. While DAFs are easy to set up and can accept a broad range of cash and non-cash assets, be sure to meet with your tax and financial professionals who can help determine if this is an appropriate strategy for you.

3. Don’t miss the deadline
December 31 is the deadline for making both cash and non-cash charitable donations if you plan to take the deduction on your 2024 tax return. Checks must be postmarked by December 31, and donations made electronically using a credit card, bank account (ACH), PayPal. Apple Pay, or other methods must be received by 11:59 PM EST on December 31, 2024.²

4. Allow extra time for non-cash donations
Donating appreciated stocks or other assets can provide an attractive tax benefit because the full market value of the asset is deductible regardless of the purchase price, and any embedded gains are not subject to capital gains taxes. But keep in mind, certain non-cash gifts may require a longer lead time to complete.

For example, transferring stock requires coordination between you, your brokerage firm, and the charitable organization receiving the shares. And real property valued at $5,000 or more will require a qualified appraisal. So you don’t want to wait until the last minute to initiate these gifts. Work with your tax and financial professionals as early as possible before year end if you plan to donate these types of assets in 2024.

5. Make sure every dollar counts
For your charitable donations to be eligible for a deduction, the organizations you donate to must be qualified 501(c)(3) charitable organizations. You can check the status of an organization using the Tax-Exempt Organization Search Tool available at IRS.gov. Also, if you receive any benefit from your donation, you must subtract the value of the benefit you received.

Taxpayers can use Schedule A (Form 1040) to record cash gifts in any amount and non-cash gifts valued under $500. For non-cash contributions greater than $500, the IRS requires Form 8283 to be submitted. Finally, be sure to retain donation receipts that include the name of the organization and the amount and date of your donation(s).

To learn more about strategies aligned with your planned giving goals, contact my office to schedule a time to talk.

^{1)”Topic no. 501, Should I itemize?” IRS.gov, 30 SEP 2024, https://www.irs.gov/taxtopics/tc501.
2)”Charitable Donation Tax Deadlines for 2024 (US Taxpayers).” Givewell.org, https://www.givewell.org/about/donate/tax-deadlines, Accessed 1 NOV 2024.}