0

Different Ways to Give to Charity

Ways to Give to CharityGiving cash or check directly to a charity is what most people are familiar with. However, there are many ways that you can give to your church and favorite charities. When you are getting out of debt, about the only tool you have for giving is going to be giving cash because all your non-retirement assets should have been thrown at your debt. Your will is another way you can give to charity. If you have investments, you have more tools to help you be outrageously generous.

Tax Advantages

When giving to charity, I always think about how I can reduce my tax burden as well. Don’t give to charity to reduce your tax burden. That’s backward thinking. Give to charity. Period. If you can reduce your tax bill, great. Take advantage of it.

With the passage of the Tax Cuts and Jobs Act in 2017, most people will not itemize on their taxes. If you do still itemize, the income tax deduction limits increased, so make sure you know what those limits are when filing your taxes. Take advantage of all the different ways to reduce your tax burden so that you can build additional wealth and give even more.

Cash

Cash (checks, a bank’s bill pay, debit card, etc.) is the simplest way to give to a charity. When you are working on eliminating your debt you can still give money to your favorite charities. Send them a check in the mail or drop it in your church’s collection plate. You can use your bank’s bill pay to send money to a charity or give them your debit card information. No matter how you do it, anyone can give cash to a charity.

Donating Appreciated Assets

If you have assets that have appreciated in value over the years and want to give generously by donating those, it could be best to donate the assets to charity as opposed to selling the assets and donating the cash. If you donate the assets, you do not have to pay capital gains on the sale of the assets. If you itemize your taxes, you can still claim the charitable contribution deduction. You can save on capital gains tax and federal and state income tax doing it this way. Always discuss your options with your tax advisor and know the tax laws and limitations.

Donor Advised Fund

If you are in a position (inheritance maybe) where you have a large amount of cash or assets that you want to donate to charity and get the tax deduction in the current year but are not sure which charity you want the money to go to, a donor advised fund might be right for you. If you don’t want the money to go to a charity all at once but you still want the tax deduction right now, a donor advised fund might be the way to go. You can use a donor advised fund even if you don’t donate much each year. It’s not worth the effort from a tax-savings standpoint since the standard deduction doubled, but it can still be useful to keep track of all your donations. Just remember that there are limits to the amount that can be deducted from your taxes.

The money inside the donor advised fund can be invested in various ways—stocks, bonds, and mutual funds to name a few—so the money in there can keep growing over time. You can keep adding to your donor advised fund and distribute money to various charities when you are ready. Think of it as your own little private charity that you run.

Qualified Charitable Distribution

A qualified charitable distribution is when you make a charitable contribution to a qualifying charity directly from your IRA. You do not have to pay any federal income tax on this money even if you do not itemize. This is a great way for retirees to give to charity. You can claim the standard deduction and still deduct your qualified charitable distribution. You can have your cake and eat it, too!

Estate Planning

In the end, you don’t get to take any of your wealth with you. However, you get to decide what happens to it after you die. Make sure you have a will. If you want to donate your wealth to charities after you die, you can state this in your will. If you want your children or others to keep your legacy alive and run any charities you set up, you can state that in your will. Get with a lawyer and estate planner to discuss your options. Your outrageous generosity doesn’t have to stop after you die.

 

There’s a lot of information out there. Here are a couple of sites where you can find more information on these things:

https://www.fidelitycharitable.org/giving-account/compare-ways-to-give.html

https://money.usnews.com/money/retirement/iras/articles/how-to-donate-to-charity-from-your-ira

 

There are many ways to give to charity. Find one that works for you. Whether you give a little or give a lot, see if there are ways you can save money on your taxes. Either way, put yourself in a position to be outrageously generous and give to your favorite charities.

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge