The Benefits of Charitable Giving
Curtis has earned the Life and Health Insurance licensure, has passed the Series 66 examination, and has earned a degree from the University of Nevada, Reno. He has over 20 years of experience in the financial industry, helping others protect, grow and manage their wealth. Curtis helps clients create customized strategies for their portfolios based on their unique financial goals.
THE BENEFITS OF CHARITABLE GIVING
For many people, charitable giving is an aspect of their financial and personal life that they enjoy and participate in on a regular basis. So, what are some of the benefits that we can take advantage of when giving to charitable organizations? Further, some individuals and families have decided to leave part of their legacy to charity, which is fantastic, but are there other ways to simultaneously benefit the charitable organization and one’s own financial situation? Below we will discuss a few compelling reasons as to why charitable giving is beneficial to financial plans.
QUALIFIED CHARITABLE DISTRIBUTIONS (QCDs)
One of the biggest places I see where charitable giving can be beneficial to both the charity and oneself is with a Qualified Charitable Distribution (QCD). This is where an individual can use a portion of their pre-tax money to give to a charity and avoid taxation on that money as it comes out of the pre-tax account. As we know, all pre-tax accounts are subject to Required Minimum Distributions (RMDs), either that start for people at the age of 70 ½ or 72, or at the age of 73 or 75 depending on their year of birth.
So, how does a QCD work? The QCD allocates money directly from your Traditional IRA to the charity of your choice. I am going to repeat that line as it is a very important part of this process; the distribution must be sent directly to the charity from your tax-deferred retirement account (you as the individual will never take custody of said monies.) The charity must also be a qualified 501(c)(3) and you can distribute up to $105,000 annually to one or more charities. You can start this as early as 70 ½ years old, so if there is some Traditional IRA money you are looking to donate to charity, this is a great opportunity to reduce taxes and give to charity at the same time. It can also be implemented with your RMD to avoid taxation on that as well. You can read more on QCDs here.
MORE THAN QCDs
There are other taxable advantages to giving to charity, and for those benefits, you should meet with your tax professional, CPA, and or financial advisor to see what strategies you can best utilize to get the most out of these donations. Some of these options can include, but are not limited to, tax deductions, estate planning benefits, income generation, or a combination of these advantages. Licensed professionals can provide invaluable assistance in minimizing your financial liabilities while maximizing the value and impact of your donation. By selecting the most appropriate strategy or combination of strategies tailored to your specific circumstances and goals, they can ensure that your gift achieves its potential.
Amongst all, the emotional benefits of these efforts will usually far outweigh any monetary advances. Engaging in philanthropy can enrich people's lives with a sense of fulfillment in knowing that their contribution is making an active difference in the lives of others, especially when donated locally or within their community. So, through thoughtful planning and true generosity, it is possible to create a legacy that enhances both one’s own life and the world around them.
WHERE TO GO FROM HERE
Overall, many folks enjoy the feeling of giving to charity and helping others through it so much so that it is an expense they account for in their financial plan. Whether or not charitable giving is for you, it is valuable to know that while sharing your wealth with the organizations you are passionate about, you can leverage it to help your individual financial situation as well. If you have questions about this topic, we encourage you to speak with the professionals you have partnered with. Please don’t hesitate to reach out to our team at Cornerstone to schedule a meeting to discuss different strategies. You can call us today at 775.853.9033 or click here.
Based in Reno, NV, Cornerstone is for individuals and families looking to grow wealth, protect and preserve their life savings, and plan for the distribution of their estate in a tax-efficient manner through a tailored strategy. Schedule a time to discuss your financial goals with us.