Shri Mangal Mandir

WHAT IS CHARITABLE GIVING?

A charitable gift is a donation to a qualified 501(c)(3) nonprofit organization in exchange for which you (the giver) don’t receive anything in return. While most people think of donations as “cash,” you can also donate property, investments, real estate and more.

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IS CHARITABLE GIVING ELIGIBLE FOR A TAX DEDUCTION?

It can be! For 2023, you can deduct cash charitable contributions up to 60% and noncash contributions up to 30% of your Adjusted Gross Income.

 

But to deduct your donations, you have to itemize deductions. And for a lot of people, that’s not the best option anymore because the standard deductions are so high – $27,700 for a married couple filing jointly in 2023.

 

This means that a couple who maxes out the state and local tax deduction of $10,000 and has another $10,000 in property taxes to deduct would need to donate at least $7,700 before any of that amount became worth an additional deduction over the standard deduction.

Even if you don’t usually itemize deductions, all is not lost! Keep reading for strategies that can still make the most of your giving.

 

REDUCE THE IMPACT OF RMDS WITH QCDS

The tax impact of required minimum distributions can blindside successful investors. If you plan to make charitable contributions, a qualified charitable distribution could be the answer.

 

With a QCD, you direct money from your RMD (up to $100,000) to a charitable organization instead of receiving it and donating after-tax dollars. QCDs can benefit you if you’re taking RMDs and you:

·       Don’t plan to itemize deductions. A QCD isn’t included in your taxable income – no itemization needed. So with a QCD, you remove the money from your income, plus you can still take the standard deduction.

·       Don’t need the RMD money. While you could, of course, take the RMD and then donate that money outside of a QCD, the income would still be counted in your pre-deduction adjusted gross income, and that can affect whether you’re subject to things like higher Medicare premiums or additional kinds of taxes.

·       Want to make an annual charitable gift and have the flexibility to choose a different charity each time.

Special note: The SECURE 2.0 Act pushed back RMD dates, but not QCD dates – so as long as you’re at least age 70.5, you can take a QCD even if you haven’t started RMDs yet. If you fall into this category, note that:

·       You can’t include the amount of the QCD as an itemized deduction, so it won’t lower your taxes for that tax year.

·       However, it will remove money from your retirement accounts tax-free, which can help reduce the tax burden in future years once you start taking RMDs.