5 Ways to Maximize Charitable Giving This Holiday Season

In the midst of the holidays, we’re struck by an overwhelming sense of cheer and generosity. We buy the perfect gifts for friends and family and open our homes for cozy holiday meals. And as we spread joy, we’re excited to help those in need and support causes we care about—because we know that a little can go a long way.

As much as charitable giving comes from the goodness of our hearts, it’s also an excellent way to maximize tax benefits. Ending the year with a holiday donation could make all the difference if you give wisely.

If you’re ready to increase your charitable giving this holiday, consider how you’ll give and what effect your gift will have on this year’s tax return. A financial advisor will empower you to make the most of your donations. By giving mindfully, you could not only help maximize your tax benefit but also maximize your gift’s impact.

Maximizing Your Impact

Your donation can go a long way in helping the organization move forward on crucial initiatives. Contributing to a cause near to your heart—through a qualified charity—can help provide the resources they need to make a difference and grant you with a sizable tax deduction.

Consider the following to maximize the impact of your donation:

1. Verify that you’re giving to a charity that qualifies for a deduction. It’s important to note that not all organizations are qualified in the eyes of the IRS. To be sure that the organization you choose qualifies for a tax-deductible donation, check the IRS website to confirm before you give. You can view a list of qualified organizations here.

2. Ensure you have the correct documentation for donations. Even when giving to a qualified charity, you’ll need proof to send to the IRS. It’s a common misconception that a canceled check will suffice. Request documentation from any charity to which you give a cash or item donation of more than $250. Additionally, contributions of more than $500 require an 8382 tax form for non-cash donations, and those $5,000 and over require an appraisal verification.

3. Set up a donor-advised fund (DAF). If your goal is to contribute a substantial gift to multiple organizations, setting up a DAF will allow you to take a tax deduction immediately while donating over time. Your financial advisor can help you choose the best fund for your charitable goals.

4. Give stock instead of cash. By donating appreciated stock directly to a charity, you’re able to avoid paying long-term capital gains tax. This method allows you to save money and donate more because you’re able to give the full stock amount—rather than if you were to cash it out, pay the tax, and then donate it.

5. Bundle your donations. Following the Tax Cuts and Jobs Acts (TCJA), the standard deduction increased to $12,000 for those who file alone and $24,000 for married couples. If you’re unsure if you’ll meet the standard deduction, one option is to bundle your donations to make a bigger impact. For example, instead of giving $3,000 for three years, you would give $9,000 in one. This goal can also be achieved through a donor-advised fund (see number 3).

However you give, your financial advisor can help you maximize your donation’s impact on your chosen cause and on your finances.

Consult Your Financial Advisor

Holiday giving has arrived! Consult a financial advisor to ensure that your holiday gifts make a long-term impact. Our team of advisors enables you to make a world of difference.

Southwestern Investment Group approaches your finances holistically, helping you make choices that align with your financial goals. Contact us to schedule a consultation and begin supporting a cause close to your heart.

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