Maximize Charitable Gifts While Minimizing Taxes

By Michael J. McCool, CFP, CIMA

Financial Advisor, Consolidated Planning Corporation

Did you know that the holiday season is also the year-end charitable giving season? That’s right. Over 30 percent of all charitable donations are made in December alone. So if you are giving to charities this year, why not do it in the most tax efficient manner possible. Here are three smart giving ideas and as always, be sure to check with your tax advisor to see how these strategies impact your taxes.

Gifting Appreciated Securities

Instead of giving cash, give appreciated securities to your favorite charity. It’s easy to do and you avoid paying capital gains taxes on the donated shares. Charities realize the full value of your securities because they do not pay taxes plus you get to deduct the full value of your gift if you itemize deductions. If for any reason you you want to hold on to your shares and give cash instead, consider donating the shares anyway and using your cash to repurchase them and establish a higher cost basis.

Qualified Charitable Distribution

Are you at least 70-1/2 years old and subject to Required Minimum Distributions from your IRA?  Then a Qualified charitable Distribution (QCD) might be right for you. A QCD is a direct transfer of funds from your IRA to a qualified charity and can be used to satisfy your Required Minimum Distribution. The main benefit of a QCD is that it is not counted as taxable income.  With lower taxable income, not only do you pay less income taxes, you may have lower taxation of your Social Security benefits and lower Medicare premiums. This multiplier effect makes the QCD a very powerful tax savings strategy.

Donor Advised Fund

Think of a Donor Advised Fund (DAF) as your own private foundation only with less expenses and ongoing administrative work. By funding a DAF, you can get an immediate tax deduction and the potential to give money to your favorite charities over many years. This is possible because the DAF seeks to increase the value of our original gift through prudent investing. Another benefit is that you can put your family name on your DAF and pass it down to future generations.

Michael McCool is CERTIFIED FINANCIAL PLANNERTM professional and wealth adviser at CPC Advisors, an independent registered investment advisor with offices in Atlanta and Athens. He is also a registered representative with Raymond James Financial Services, Inc., member FINRA/SIPC.  Michael has 19 years of financial planning and wealth management experience and brings a holistic approach to managing clients’ finances.  Outside of the office, you can find Michael serving on the Atlanta Ronald McDonald House Charities Advisory Council, Finance and Investment Committee, competing in U.S. Masters Swimming, and playing tennis.  Michael is also Legacy Advisor for Atlanta RMHC.

To learn how you can keep sick children and families together while minimizing your taxes, contact Marissa Greider, Senior Director of Major and Planned Gifts, at marissa.greider@armhc.org or 678.704.8088 or visit armhc.org/legacy.

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