Giving Thanks This Holiday Season: 5 Smart Ways to Give

Copper Leaf Wealth Advisor Breanna Sykes has published a timely new article that includes some smart ways to give this holiday season. The article, published on LinkedIn, provides some great insight:

Here are five tax-smart ideas for giving this holiday season.

1.      529 plan

If you are looking to give money to the younger generation for college, you can take advantage of a 529 plan. A 529 plan allows the funds to grow tax free for the beneficiary to use for college expenses. If you were hoping to give more than $16,000 this year, you can take advantage of the 5-year election. This allows an individual to maximize their gift amount to $80,000 for 2022 by bunching 5 years’ worth of gifts in one year. You cannot gift to this plan for 5 years after making this election. This number is doubled for married couples filing jointly. For more information about gifting 529 plans please click here.

2.      Qualified Charitable Distribution

Often referred to as a QCD, Qualified Charitable Distributions can be used by individuals who are at the age where they are taking Required Minimum Distributions (RMDs) from their IRA accounts. If you are over 70 ½ you can donate up to $100,000 of your otherwise taxable distribution from your IRA directly to a qualified charity instead of taking your required minimum distribution. If you didn’t need this additional income and are charitably inclined, you can pay your RMDs directly to a charity of your choice. This allows you to reach your philanthropic goals without incurring unnecessary income taxes.

3.      Donor Advised Fund

Donor Advised Funds (DAF) are a great giving tool if an individual wants to donate a lump sum of money in a particular year, especially if they have not decided what charity the funds will go to yet. A DAF is like an investment account designated for charity in that an individual can make grants from it. The donor receives a tax deduction for the donation and the funds are invested with tax-free growth. You can donate cash, stocks, mutual funds, and other types of investments. For more information about DAF plans please click here.

4.      Direct to Charity

Giving doesn’t require a fancy strategy. You can always donate directly to your favorite charity or non-profit organization. Donations can include cash, vehicles, assets, equipment or most anything of value. Your favorite charity can tell you what they are currently in need of if you are searching for ideas.

5.      Give Your Time

Giving isn’t always about how much money you can spare. Often, your time is the most valuable gift. This is the perfect time of year to help your local community or non-profit organizations by volunteering. Whether you have a specific skill such as cooking, gardening, or tutoring, or if you are just ready to be present where needed, there are plenty of opportunities for you close to home.

Philanthropic giving is a special area of focus at Copper Leaf Financial. We help you create a giving plan that maximizes your charitable dollar so that you can give more and have the greatest impact. An organized plan also allows for intentional giving and overall alignment between your values, your overall financial plan, and your community and lifestyle. Call us today at (802) 878-2731 to schedule a complimentary strategy session.

Recipients should not act on the information presented without seeking prior professional advice. Check with your tax advisor about your specific situation or click here to reach out to us at Davis & Hodgdon CPAs.