Updates from Truman Heartland's President & CEO | Planning for Ye

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News and Updates from President & CEO Phil Hanson

Updates from Truman Heartland's President & CEO


Phil Hanson shares information on charitable giving trends and how the Truman Heartland Community Foundation is partnering with individuals and organizations across the region to benefit the Eastern Jackson County community.

Planning for Year-End

Fall is a great time of the year--with a chill in the air, football season, and the trees dropping their annual autumn show. As you are beginning to think about the holidays, remember that now is the time to do some planning about your year-end giving and how it may impact your taxes. I know none of us like to think about taxes; however, thoughtful planning now can help you reduce your tax burden while supporting your favorite charities.

Your tax professional can help you calculate your potential itemized deductions to see where they are compared to the standard deduction, which was raised in 2017 and indexed. The standard deduction for single taxpayers is $12,950 in 2022, and the standard deduction for married individuals filing jointly is $25,900.

Earlier this year, one of my columns discussed charitable bunching, a strategy that can assist with year-end tax planning. Charitable bunching is when you group the contributions you intend to make over years into one large donation to a Donor Advised Fund (DAF). In the year you make your “bunched” donation, you will be able to itemize your tax return and enjoy a larger deduction. In the years you do not bunch contributions, you will continue to make regular donations to your favorite charities through your DAF and claim the standard deduction on your taxes. This method allows you to continue to support your favorite charities while maximizing the tax benefit of your charitable contributions.

Another way to maximize your charitable impact while minimizing your tax burden is to donate appreciated non-cash assets such as stocks (held more than one year). The current stock market environment is undoubtedly making it a challenge to identify appreciated securities in your portfolio. Assuming you still have some, they can be donated to a Donor Advised Fund (DAF) or directly to your chosen nonprofit organization. By donating the asset itself, rather than donating the proceeds from the asset’s sale, you can eliminate capital gains tax on the gift and get an itemized deduction for the value of the donation. As long as the nonprofit accepts your asset type, it is a win for you and the charity.  

With a Donor Advised Fund, you can make tax-deductible contributions of cash or non-cash assets at any time. Community Foundations are uniquely positioned to accept many different gifts, including appreciated securities, cryptocurrency, and real estate. All donations to DAF funds made by December 31 are eligible for a 2022 tax deduction. Once your DAF is established (with as little as a $5,000 initial contribution), you can start making grants immediately or wait until the timing is right for you. And if you manage all your charitable giving through your DAF, the only receipts you need at tax time are for the gifts into your fund. You won’t have to track down tax receipts from multiple charities to give to your tax preparer.

If you have an IRA and are over the age of 70 ½, making a Qualified Charitable Distribution (QCD) from your IRA directly to a charity is a tax-wise way to give, as well. RMDs now apply to those over 72 ½, but the QCD can still be made at 70 ½. A QCD will count towards your RMD, and you won’t pay taxes on the withdrawal. It’s a smart way to avoid ordinary income tax on withdrawals from your IRA while supporting your favorite charities. Unfortunately, current rules don’t allow QCDs to a DAF, but they may be made to a scholarship fund or designated fund.

While most of us would rather untangle 300 feet of twinkle lights than think about taxes, taking a little time now to do some smart planning will enable you to support your favorite charities and reduce your tax burden tomorrow. Let us know if you would like more information about charitable giving and year-end tax planning. We’re here to help!

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