Page 17 - Southern Exposure - December '24

Southern Exposure, Page 17

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Consider Tax-Smart Charitable Gifts

By Sally Sima Stahl

As we enter the annual But if you donate these RMDs directly to a qualified Jones & Co., L.P., and in California, New Mexico and
season of giving, you might charity, you can avoid the taxes. And because these Massachusetts through Edward Jones Insurance Agency
be thinking of charities you donations, known as qualified charitable distributions of California, L.L.C.; Edward Jones Insurance Agency
wish to support. But you (QCDs), will reduce the balance on your IRA, you may of New Mexico, L.L.C.; and Edward Jones Insurance
also might be wondering have lower RMDs in the future. Agency of Massachusetts, L.L.C.
how to gain some tax Of course, if you need some or all your RMDs to help Edward Jones, its employees and financial advisors
benefits from your gifts. sustain yourself in retirement, the use of QCDs may not cannot provide tax advice. You should consult your
It used to be pretty be of interest to you. Keep in mind, though, that you can qualified tax advisor regarding your situation.
straightforward: You wrote start making QCDs at 70½, even before you must start Contact us at (561) 748-7600, Sally Sima Stahl, CFP ,
®
a check to a charity and taking RMDs. QCDs up to $105,000 can be taken in 2024. AAMS™, 1851 W. Indiantown Road, Ste. 106, Jupiter,
then deducted the amount • Consider a donor-advised fund. If you’re interested FL 33458.
of the gift, within limits, in a long-term charitable giving arrangement, you might
from your taxes. But a few years ago, as part of tax law want to consider establishing a donor-advised fund. You
changes, the standard deduction was raised significantly, can put many types of assets into this fund, and then
so fewer people were able to itemize deductions. direct it to make grants periodically to the charities
Consequently, there was less financial incentive to make you’ve chosen. You get an immediate tax deduction for
charitable gifts. your contribution, and, if you donate appreciated assets,
Of course, this didn’t entirely stop people from making such as stocks, you’ll avoid the capital gains taxes you
them. And it’s still possible to gain some tax advantages, would have incurred if you simply sold the stocks and
too. then gave the money to the charities. One note of caution,
Here are a few tax-smart charitable giving strategies: though—your contributions to a donor-advised fund are
• Bunch your charitable gifts into one year. If you irrevocable, and once the assets are in the fund, you can’t
combine a few years’ worth of charitable gifts in a use them for anything except charitable giving.
single year, you could surpass the standard deduction These strategies—QCDs and donor-advised funds in
amount and then itemize deductions for that year. In the particular—can be complex and involve several issues
years following, you could revert to taking the standard of which you should be aware. So, you should consult
deduction. your tax advisor before taking action. But if any of these
• Make qualified charitable distributions. Once you techniques are appropriate for your situation, give them
turn 73 (or 75 if you were born in 1960 or later), you some thought—because helping a charitable group and
must start taking withdrawals from your traditional or getting tax benefits for doing so is a “win” for everyone.
inherited IRA. These withdrawals—technically called This article was written by Edward Jones for use by
required minimum distributions, or RMDs—are taxable your local Edward Jones Financial Advisor, Edward
at your personal income tax rate, so, if the amounts are Jones, Member SIPC.
large enough, they could push you into a higher tax Edward Jones is a licensed insurance producer in
bracket or cause you to pay larger Medicare premiums. all states and Washington, D.C., through Edward D.

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