Planning
Clients who give regularly usually give inefficiently, and the fix is rarely complicated. It is matching the vehicle to the situation — and getting the year right.
Clients who give regularly usually give inefficiently, and the fix is rarely complicated. It is matching the vehicle to the situation.
The simplest improvement available to most donors. Giving a long-held appreciated position rather than cash generally avoids the gain and, for a donor who itemizes, produces a deduction based on the value given.
The client who writes a check every year while holding a position with a large embedded gain is leaving money on the table in both directions.
Useful for two distinct reasons, and firms often only mention the first.
Timing. The deduction lands in the year of the contribution; the grants can go out over years. This makes concentrating several years of giving into one high-income year possible — the sale of a business, a large bonus, an exercise of options.
Administration. One receipt, one record, and the ability to give appreciated or complex assets to organizations that could not accept them directly.
For clients past the qualifying age, giving directly from a traditional retirement account can satisfy a required distribution without the amount appearing in income at all.
That last part is what makes it powerful and what makes it easy to underuse: because the amount never enters income, it does not push up the figures that drive Medicare premiums or the taxation of Social Security. A deduction does not do that.
The trap is sequencing. Take the required distribution first and the opportunity for that amount is gone for the year.
Ask what the client intends to give over the next five years, not this year. Almost every efficiency available here comes from deciding when, and that decision cannot be made one year at a time.
Finding the low-income years →
Questions this did not answer? Ask them directly — that is what the twenty minutes is for.
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