The Illinois CPA Society offers three tax-savvy ways to support your charitable giving.

CHICAGO, Nov. 20, 2024 – Thanksgiving is right around the corner, and the year-end holiday season will be in full swing. As you consider your charitable giving this year, remember there are some smart ways to go about it that could give you a tax break. Here are three tax-savvy ways to support a charitable cause you care about:

1. Get Your Charitable Gifts Ready Now: If you wish to make charitable gifts in sums that warrant itemizing your tax deductions, cash donations to qualified charities can generally be deducted from taxable income (limited to 60% of adjusted gross income [AGI]). However, a better gift to give may be appreciated long-term investments. Gifting long-term investments (like stocks) can be a generous but tax-savvy move, as you don’t have to recognize the capital gains and you can take a tax deduction equal to the full fair market value of the donation (limited to 30% of AGI). It’s best to check with your broker for the final date your gift can be processed to qualify for this tax year.
2. Consider Starting a Donor-Advised Fund (DAF): If you regularly donate to charity, funding a DAF could offer you a substantial tax break. A DAF is structured like an investment account, however the funds held within it are specifically for charitable giving. Funding a DAF allows you to stack multiple years’ worth of donations into one large contribution to the DAF (especially helpful if you have a high income this year), providing a tax deduction during the year the contribution is made. The money held in the DAF can be invested and distributed at the donor’s (your) discretion.
3. Make a Qualified Charitable Distribution (QCD): Making a QCD could satisfy your desire to give to charity and reduce your taxable capital gains or income. For 2024, you can donate up to $105,000 to a charity directly from your IRA using a QCD. The donation limit increases to $210,000 for eligible married couples with separate IRAs. While there’s no tax deduction for the donation, taxpayer’s subject to taking a required minimum distribution (RMD) from their IRA can use a QCD to satisfy all or part of their RMD without increasing their taxable income.

Need help making sense of the complexities of tax and financial planning? A CPA—a certified public accountant—can help you to strategically manage your finances all year long. And when tax time rolls around, a CPA can help prepare and file your tax return to ensure all eligible credits and deductions available are maximized. The Illinois CPA Society’s free “Find a CPA” directory can help you find the trusted, strategic advisor that’s right for you based on location, types of services needed, and languages spoken. Find your CPA at www.icpas.org/findacpa.