Weekend Reading: 3 Tax-Smart Charitable Giving Strategies You Can Use Any Time of Year

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading 3 tax smart charitable giving strategies Weekend reading 3 tax smart charitable giving strategies
Weekend Reading

You often hear of charitable giving as an end-of-year tax planning move; however, this isn’t always the ideal time from a tax perspective for you, nor does it most effectively serve the organization(s) you support.


As such, three strategies for charitable giving you can leverage year-round include:

📌 Qualified charitable distributions from a traditional IRA: To help prevent IRA payouts from adding to your taxable income, directing those assets to a qualified charitable distribution can help lower future distribution amounts and potentially help you qualify for lower Medicare premiums.

📌 Creating a charitable remainder trust: This is an irrevocable trust that can help create income for you or other beneficiaries, with the remaining assets going to your nonprofit of choice. It’s considered a “split interest” giving vehicle that allows you to make trust contributions, which then prompt eligibility for a partial tax deduction based on the assets that will pass on.

📌 Setting up a donor-advised fund: This involves putting a lump sum of money (cash, stocks, bonds, mutual funds, etc.) into a managed fund, which allows you to claim an immediate tax deduction for that amount. Then, gifts can be directed to charities over a chosen period of time. Further, this strategy can also help you avoid capital gains taxes on assets in the fund.

While you might consider cash to be the simplest form of giving, you have a variety of other ways to support organizations that aid your philanthropic values, while simultaneously elevating your tax efficiency and estate planning goals.