Charitable Giving in Your Financial Plan

As you grow your wealth, you may find the desire to give back. That’s where charitable giving comes in. Charitable giving can allow you to support causes and organizations you believe in while reducing your income tax, capital gains, and estate taxes. Here are several ways to incorporate charitable giving into your overall financial plan:

Identify your giving goals

There are so many well-deserving causes out there. Take the time to figure out which ones are most important to you and your family. You might choose to support the environment and refugees or medical research, social justice, and the arts. Think about what motivates you and how donating to specific causes reflects your values.

Consider charitable tax deductions

You can deduct charitable gifts on your tax return whether you make a cash gift or donate goods or services. To do so, however, you’ll need to choose a 501c3 tax-exempt organization. Please consult a tax advisor to determine the limits to how much you can deduct and whether it makes sense for you to itemize and lock in the deduction.

Gift using life insurance

Use life insurance to gift by naming a charity as the beneficiary. Often, the strategies you use to transfer wealth, which organizations you want to donate to, and the length of time you want your assets to last is simplified by using life insurance.

Explore Qualified Charitable Distributions (QDCs)

If you’re 70 1/2 years of age or older, you can use a qualified charitable distribution or QCD to donate directly from your IRA to the charity of your choice. Even though the gift amount won’t qualify for a charitable deduction, it won’t count as taxable income and will allow you to simultaneously reduce your taxable income and give back.

Use Donor-Advised Funds (DAFs)

With DAFs, you can immediately donate cash or other assets to a charitable investment account and claim a tax deduction. Since a DAF will grow tax-free, you may choose the fund distributions over time to organizations and causes that mean the most to you. If you time your contributions to coincide with high-income years, you’ll reap the benefits of a larger deduction.

Bunch your donations

You may want to bunch your donations in one year instead of skipping one or several years to maximize potential tax deductions. This option is worth considering if your total itemized deductions for a single year fall below the standard deduction. Your itemized deductions may exceed the standard deduction and lower your overall tax burden.

SWG2306340-0722b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

Our family financial services firm, August H. Velten & Associates, has been in business for 12-years in Melbourne, FL.   August Velten (CLU) is a 40-year veteran of the Financial Services industry.  August is a former instructor for the Life Underwriter Training Council and once occupied the legislative seat for the Maine Association of Life Insurers.  In Brevard County, you may have seen him on local access TV or read one of his articles in a local area magazine.   Jessica Waterhouse, August’s daughter, left her own practice to join the firm in 2019.  Jessica is a Florida licensed insurance producer, securities licensed (Series 65), a long term care specialist (CLTC) and holds certification as a National Social Security Advisor.  Both August & Jessica are instructors for financial literacy workshops in both Brevard and Indian River County offering education in Social Security and Financial Planning.  Contact the office today to schedule an introductory meeting or review of your current financial plan.

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