Ladies – 3 Ideas To Give More And Keep More!

Women are natural givers – sometimes to our detriment. We need to understand safe boundaries (how to help, not hurt) around sharing what we have. We also want to be wise in utilizing our financial resources for charitable intentions given personal needs, changing market environments and tax laws.

Women are more likely to give in areas that speak to their heart. I encourage you to create a “giving plan” that aligns your intentional “why” you give with the optimal “how” to do so. Data from Charity Navigator notes that 12% of annual giving occurs in the last three days of the year – so tax benefits do matter. If you are a giver and want to do it with moxie and momentum, here are some strategies you want to look at in the last quarter of 2022.

Start with analyzing whether you will be better off taking the standard deduction, or with the changes that have been made to the schedule A, if you are still better off with itemizing your return. Standard deductions have gone up – for individuals $12,950 and couples $25,900 If you are over 65, tack on an additional $1,400 each. Previously about 30% of American’s itemized their returns, and it is estimated that fewer than 10% will do so in 2022.

For those that will benefit by itemizing, pack as much of your medical expenses into 2022 as possible. Do you have portfolio gains in a taxable account? Consider “stacking”, or “chunking” your donations. There are two fantastic tools:

Donor Advised Fund

With the DAF, you take the deduction the year the contribution was made. If you itemize, the charitable cap has gone up as a percentage of AGI. Previously, it was capped at 50% of AGI with a carry forward. Now the cap has risen to 60% of AGI. Once your contribution is in the DAF, you decide when and to whom you want to the DAF to disburse funds to. It could be done all at once, or over a period of years. This is one way for families to open up the discussion around giving.

Charitable Remainder Trust 

If you need income, this is a creative way to leverage your giving, receive a tax deduction and maintain cash flow for a period of time or a lifetime. The tax benefits and income are based on many factors, so discuss this option with your professional advisors.

Best suited for the standard deduction and have reached age 72? You want to keep your AGI as low as possible in order to minimize the impact on your Medicare premiums, sur taxes and provisional income that impacts the taxation of your social security. Consider this:

Qualified Charitable Deduction

Keep your Required Minimum Distribution off page 1 of your tax return. Ask your custodian to give your distribution directly to the qualified charitable organization of choice. It needs to come out of a personal IRA and can’t go into a DAF.  You can give up to $100,000 out of your IRA (more then your RMD) to support causes you care about IF you have a robust IRA account. You will avoid ordinary income tax now and avoid having your heirs pay ordinary income taxes if they inherit it.

None of these options should be viewed in a vacuum and should be considered in tandem with your other financial vehicles and the opportunities and concerns around lifestyle, longevity, liquidity and legacy issues. These ideas should be discussed in depth with your professional advisors.

We have three quarters of the year behind us, summer is winding down and now is a great time to crunch some numbers and delve into the discussions that allow you to give generously and keep more in your pocket.