Maximize Your Impact: Tax Benefits of Charitable Giving

By Jen Danko, CPA, Principal

Giving back is one of the most meaningful things you can do, particularly when it supports causes you care about. But did you know that with a little planning, your generosity can also create financial benefits for you?

Let’s walk through some strategies to help you make the most of your charitable contributions, whether you’re giving cash, stock, or something else. And don’t worry—the team at Maner Costerisan is here to help you every step of the way.

Making the Most of Year-End Giving

The holiday season is a time of sharing—gifts, food, and cherished moments with loved ones. It’s also the perfect opportunity to reflect on how you can give back to your community. For many, year-end giving is a cherished tradition that positively supports causes and foundations that matter to you and your family.

Year-end giving is also the last chance to maximize your charitable tax deductions for the calendar year. It’s crucial for you to carefully consider how your giving can be not only generous but also impactful on your finances.

Start by choosing charities that align with your passions. With over one million non-profits in the U.S., you don’t have to settle for one that isn’t a perfect match for your values. Whether you’re passionate about disaster relief, education, or veteran support, there’s a charity out there that aligns with your goals. Take the time to research each organization’s programs and make sure they’re delivering meaningful, lasting change.

Next, look for fiscally responsible, ethical, and effective organizations. Financially healthy charities can better sustain their missions, and those with strong governance and transparency are more likely to use your contributions responsibly. Select a non-profit you trust, and, when possible, give unrestricted gifts that allow them the flexibility to respond to urgent needs or invest in long-term initiatives.

Finally, check the leadership. Effective organizations often have stable, dynamic leaders. Frequent leadership turnover can be a red flag, so take note of the charity’s track record before giving.

Charity Navigator and GuideStar are two great resources to help you vet charities.

Should You Itemize or Take the Standard Deduction?

Once you’ve chosen your causes, consider how your giving fits your tax strategy. When tax season rolls around, you’ll need to decide whether to take the standard deduction or itemize. If you surpass the thresholds necessary to itemize, your charitable contributions can help reduce your taxable income. But if you’re just shy of those thresholds, with some thoughtful planning, we may be able to help you increase your deductions and make the most of your contributions.

However, not all donations qualify. Ensure you’re giving to registered 501(c)(3) organizations and keep receipts to confirm your gift wasn’t tied to the purchase of any goods or services. If you’re unsure how to structure your giving to ensure a tax benefit, Maner Costerisan is happy to help you sort through the details.

Beyond Cash: Other Ways to Give

While cash donations are a popular choice, there are plenty of other ways to give that might provide different tax benefits that work better for your situation:

• In-Kind Donations: Items like clothing or furniture in good condition can be deducted from your taxable income.
• Appreciated Stock: Donating stock that has grown in value can help you avoid capital gains taxes.
• Donor-Advised Funds (DAFs): This option lets you donate now and decide later how to distribute the funds.
• IRA Required Minimum Distributions (RMDs): If you’re at least 70.5, giving directly from your IRA can reduce your taxable income.
• Cryptocurrency: If you’re holding crypto, donating it might offer unique advantages.

These alternative options might feel overwhelming at first, but that’s where we come in. Our team at Maner Costerisan can break it down and help you decide what works best for your tax needs.

End-of-Year Giving Tips

To make the most of your year-end giving, follow these simple steps:

1. Choose Wisely: Find charities that align with your passions and research their impact.
2. Give Flexibly: Trust your chosen charity to use your gift where it’s needed most.
3. Plan Ahead: Donations must be made by December 31 to count for this tax year.
4. Check Leadership: Strong, stable leadership is a good sign of an effective organization.

Let’s Partner on This Journey

At Maner Costerisan, we’re more than just tax experts—we’re your partners in building a comprehensive strategy that aligns with your financial goals and personal values. Charitable giving should feel good, and Maner Costerisan is here to help make it as rewarding and impactful as possible.

Ready to chat about how you can give smarter? Email our team at maner@manercpa.com or call us at 517-323-7500 to learn how we can help.