Increasing Your Impact While Reducing Taxes

Many clients are looking for guidance on developing a charitable giving plan for the remainder of 2024 and beyond. As economic conditions have improved in 2024, you may be looking for ways to increase your philanthropic impact. Here are four actions you should consider for year-end charitable planning.

Review Basic Tax Benefits Available

Charitable Income Tax Deduction – Public Charity/Donor Advised Funds

• Can reduce your taxable income up to an AGI limit. 
  -  Cash donations are eligible for a deduction up to 60% of AGI.
  -  Non-cash donations are eligible for a deduction up to 30% of AGI.
  -  If contributions and deductions exceed the AGI limits, you may carry forward remaining deduction amounts for up to five years.
• While cash carries a higher AGI deduction limit, you have the potential to eliminate capital gains when gifting appreciated stock or non-cash assets.

Qualified Charitable Distribution (QCD) 

• You can direct up to $105K to charity in 2024 and up to $108K in 2025. (This excludes Donor Advised Funds).
• QCD withdrawals are not considered taxable income.

• If you are taking required minimum distributions (RMDs), QCD withdrawals will go toward your annual RMD amount. 

   

Utilize Tax Efficient, High-Impact Giving

Identifying Assets to Donate

• Ideal assets may be marketable assets that have increased considerably, resulting in significant capital gains tax if sold.
  -  Publicly traded securities
  -  Privately held business assets
  -  Private equity assets
  -  Restricted stock or pre-IPO stock
  -  Real estate

Charitable Swap

• If you have a concentrated position of highly appreciated stock and would like to either retain ownership or diversify, you may gift a portion of the stock, then immediately purchase the same stock or other assets with cash to diversify. This enables you to receive a sizable charitable tax deduction, reset your basis or diversify your portfolio while avoiding substantial capital gains.
   

Bunching Gifts

Exceeding the Standard Deduction

• For 2024, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. For individuals age 65 years and older, there is an additional deduction of $1,950 for single and $1,550 each if married filing jointly.
• If your itemized deductions are below the standard deduction, you may benefit from bunching your giving within a single tax filing year. This would allow you to itemize the deductions on your 2024 tax return, making you eligible for a larger deduction over time when compared to only taking the standard deduction.
   

Take Advantage of Unusual Income Tax Years

Large, Nonrecurring, Taxable Event 

• You may experience the sale of a business, bonus compensation or substantial sale of an appreciated asset. If you make a charitable gift in the same year as the taxable event, you may reduce your taxable income while offsetting capital gains taxes.

Investment Portfolio Rebalance

• If you are selling appreciated assets in favor of purchasing depreciated assets, you may have capital gains income when not offsetting with the sale of assets at a loss.
  • You may donate the appreciated assets and utilize cash or other cash-equivalent assets to purchase the same stock or diversify into other assets. 

A trusted financial advisor can help manage your charitable giving and maximize your philanthropic impact. The Texas Capital Private Bank team will partner with you to provide a comprehensive range of services specially designed to further your mission. Click here to meet the advisors in your area.