How to Give More to The Charities You Want to Support

There are several key strategies you can use to give more to the causes you care about while also paying less in taxes. WHZ Associate Vice President Holly Wanegar, CFP®  shares how. 

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Welcome to youo and you'd Money. Today's episode features Holly Wanagar, associate vice president and wealth advisor at WHZ Strategic Wealth Advisors. Today we're discussing tax efficient ways to give to the charities you want to support, just in time for the season of giving. The purpose is to remind us to look beyond ourselves and consider how we can make a positive difference in our communities and the world at large. It's about expressing gratitude for the abundance in our own lives by giving back, whether through donations of money, time or resources. And that's what we're going to talk about here today Yeah, absolutely, Gary. So this is one of my favorite topics. And at WHZ, we believe that generosity and charitable giving can play a key role in some clients financial plans. So we work with clients who embody the spirit of generosity year round and have seen firsthand how this can make such a positive impact on their lives. And if we're charitably inclined, there are some tax benefits that we'd like to take advantage of while we're supporting our favorite charities. And there's some different strategies and different types of accounts that can help us achieve those goals that we'll talk about. Let's talk about share some tax efficient strategies for charitable giving. Yeah, so I'll focus on two here. One strategy is donating appreciated stock that can help maximize your gifting. So for example, if you bought Apple stock worth$5,000 at the time that you bought it, it's now grown to $10,000. Instead of selling that stock, recognizing that capital gain and giving cash, you could give that stock simply to your charity. They don't recognize that capital gain. And you could get a tax deduction on your income tax return, which is pretty powerful. And also the second one is if you're 70 and a half or older and you have an IRA and you're charitably inclined, you can do what's called a qualified charitable distribution from your IRA. Again, if we take a distribution directly from our IRA that is taxed to us like income. However, if we give from our IRA directly to our favorite charity, we don't recognize that income tax, so makes a more powerful gift. And an example of that would be if we had a required minimum distribution of $20,000 in a year and we gave 15,000 of that directly to a charity, then we would only be subject to$5,000 of income tax on that required minimum distribution we take. So again, pretty powerful strategy. Those are both great options to consider. Are there any other strategies that our listeners should know about? Holly? Yeah, so there are a couple worth mentioning. And this gears towards accounts that we could establish that would help us achieve these goals. And first is a donor advised fund, which is a separate charitable account that we can fund that allows us to transfer appreciated stock into this account, take immediate tax deduction for that gift in the year we give to the account, and then those stocks continue to grow tax free over time, and they're held there for us to give to our favorite charity at any time in the future. So another powerful, powerful tool, and a second one that might be geared towards a more complex financial situation or estate plan would be setting up charitable trusts, such as a charitable remainder trust or a charitable lead trust. And what do those look like? A charitable remainder trust is where we would gift assets to a trust now receive an immediate tax deduction and continue to receive income off those assets for the remainder of our life or the term of that trust and the remaining balance of that trust would go to your favorite charity at the end of that term. Whereas the charitable lead trust, similar in that you give to the trust now receive an immediate tax deduction. And then your charity receives income over the life of that trust, while the balance of it at the end of the day would go either back to the grantor or would pass down to your family members. So really tax efficient transfer of wealth for these types of accounts, you get an upfront tax deduction as well as maximizing your charitable impact over your life. These are great options, Holly. Thank you for that. Do you have any final advice for our listeners as they consider giving strategies I would encourage everyone to reflect on the causes that matter most to them. And I'll leave you with three takeaways. While tax benefits are important, the true spirit of giving comes from aligning your donations and charitable acts to your values to make a positive impact in the areas that you're most passionate about. And remember, it's not all monetary. Volunteering your time and resources can be just as impactful and sometimes more to certain charities. And second, while some of the strategies we covered may be geared towards larger donations or might sound like more complex, any amount we give, even small amounts, are meaningful and can make a really big difference as well as provide you some potential tax saving strategies. And third and final, I'd recommend consulting with a financial advisor to ensure your giving strategy aligns to your overall financial plan. We help our clients do this as part of our comprehensive plan, well, invest well, live well process year round, For more information regarding wealth management and customized financial planning with WHZ Strategic Wealth Advisors, please visit whz wealth.com. wHZ Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial Network member FINRa SIPC, a registered investment advisor, fixed insurance products and services offered through CES insurance agency. They practice at 697 Pomfret Street, Pomfrethe Center, Connecticut 06259 and three nine two a Marrow Road, Tolland, Connecticut 06084. They can be reached at 860-928-2341 WHz Strategic wealth advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals while providing absolute confidence and unwavering partnership for life.