We do love it when someone refers a family member or friend to us. Sometimes the question is, “How can we introduce them to you?” Well, there are multiple ways but a very easy way is to simply forward them a link to this webpage.
Here are this week’s items:
2025 – Common Deductible Charitable Gifts in Retirement
Radon and Murs discuss the strategies and rules surrounding common deductible charitable gifts in 2025. As the new year begins, many individuals are setting charitable giving goals while seeking to maximize their tax benefits…..
2025 – Common Deductible Charitable Gifts in Retirement
Charitable giving remains a cornerstone of financial planning, offering a means to support meaningful causes while also reaping tax benefits. However, navigating the complex rules surrounding charitable tax deductions requires a clear understanding of adjusted gross income (AGI), standard deductions, and other related factors..…..
As we step into 2025, many individuals are re-evaluating their goals and aspirations for the new year. For those inclined towards philanthropy, understanding the tax implications and strategies behind charitable giving can be immensely beneficial. This guide will walk you through the key aspects of deductible charitable gifts, providing actionable insights to maximize both your contributions and their associated tax benefits.
The Importance of Charitable Tax Deductions in 2025
Charitable giving remains a cornerstone of financial planning, offering a means to support meaningful causes while also reaping tax benefits. However, navigating the complex rules surrounding charitable tax deductions requires a clear understanding of adjusted gross income (AGI), standard deductions, and other related factors. Whether you’re donating cash, appreciated assets, or taking advantage of specialized strategies like qualified charitable distributions, a thoughtful approach can make all the difference.
When it comes to donating cash to charity, many assume that a dollar donated equates to a dollar deducted. However, the tax system introduces several nuances. Cash donations are eligible for a below-the-line deduction if you itemize your taxes, meaning they’re calculated after determining your AGI.
Standard Deduction vs. Itemizing
In 2025, the standard deduction is roughly $30,000 for married couples filing jointly, slightly higher for seniors. If your total itemized deductions exceed this amount, itemizing becomes advantageous. Cash donations contribute to this total and can be deducted up to 60% of your AGI. For example, with an AGI of $100,000, you can deduct up to $60,000 in cash donations.
Carrying Forward Excess Donations
If your cash donations exceed 60% of your AGI, the excess can be carried forward for up to five years. This ensures that larger donations still yield tax benefits over time.
Donating appreciated assets, such as stocks or real estate, offers unique advantages. By donating these assets directly, you avoid capital gains taxes while still receiving a tax deduction.
Short-Term vs. Long-Term Capital Gains
Short-term capital gains: For assets held less than a year, deductions are capped at 50% of AGI.
Long-term capital gains: For assets held longer than a year, deductions are limited to 30% of AGI.
For instance, if you have $100,000 in AGI and donate long-term appreciated stock valued at $30,000, you can deduct the full amount.
Related Use Rule
When donating items like art or equipment, ensure the recipient organization uses the donation in a manner consistent with its purpose. This impacts the deductibility of the contribution, often allowing up to 50% of AGI in deductions.
For retirees aged 70½ and older, Qualified Charitable Distributions (QCDs) are an excellent strategy for maximizing charitable contributions without increasing taxable income.
Key Benefits of QCDs
Funds are transferred directly from an IRA to a qualifying charity.
QCDs count toward your required minimum distribution (RMD), reducing the taxable portion of your retirement income.
Unlike other donations, QCDs have no AGI limits, allowing substantial contributions without affecting your tax bracket.
Annual Limits
For 2025, the maximum annual QCD amount is $108,000 per individual. Over a decade, this strategy can facilitate significant charitable impact while minimizing taxes.
