Americans are philanthropic in terms of time and money spent and as such your clients would probably benefit from your advice in how to give to a qualified charity in the most tax efficient manner.
Many people put giving to charity into the same category as putting money in the collection plate or donating to a Salvation Army bell ringer during the holidays. It may not always be cash, but it’s out of their cash flow.
Before handing over any money, you want to follow a few simple rules. Make sure the organization is a recognized charity. It should have a 501(c)(3) designation from the IRS, for one. Unless it’s pocket change, your gift should be acknowledged in writing by the receiving organization.
Logically, you want to do some research to determine how much contribution goes towards the organization’s mission and how much pays for overhead and fundraising.
10 Ways to Approach Charitable Giving
Let’s assume they’ve cleared those hurdles, here are 10 ways you can advise clients to donate in a way that benefits them most regarding taxes:
Giving cash or checks. This is a good starting point. Under the new tax laws, taxpayers can deduct donations up to 60 percent of their income. Previously it was 50 percent.
IRA required minimum distribution. According to the Chicago Tribune, If your client is older than 70 ½, they can transfer up to $100,000 a year from their IRAs to charities, have it count towards their Required Minimum Distribution, but not have it added to their adjusted gross income.
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Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, can be found on Amazon.com.