Maximize charitable contributions through financial planning
By Carrie Brumbaugh, Financial Advisor, Victory Wealth Services, Prescott
Many people are charitably inclined, but even for those who aren’t, did you know that deductions can help lower your taxes, Required Minimum Distributions (RMDs), Medicare Premiums, IRMAA, and more?
Smart financial planning, especially regarding charitable donations, helps maximize the benefit to both you and the charity. Let’s explore two powerful strategies:
1. Qualified Charitable Distributions (QCDs).
A QCD can be a powerful tool when used correctly. If you simply write a check to your favorite charity from your checking account, your deduction on federal taxes may be limited. However, in some cases, you can deduct the full amount. If you’re at least 70.5 years old, you can direct your IRA to send a donation directly from your qualified account, up to $105,000 annually per individual. This is especially useful if you’re of RMD age and don’t need or want to take those distributions—you can instead send your RMD directly to a charity of your choice. Key things to keep in mind:
– Use the correct form from your IRA custodian.
– Ensure the charity is qualified, typically a 501(c)(3). Check IRS.gov for details.
– Always keep a paper trail.
2. Donor Advised Fund (DAF):
A DAF is a simple, flexible, and tax-efficient way to manage charitable giving. It allows for an immediate tax deduction the year you contribute, even if you haven’t decided which charity to support yet. While funds are in the DAF, they can grow tax-free if invested. Charities also benefit from less administrative work with these types of donations. Additionally, a DAF is a great option for those who prefer anonymity in their giving.
Maximizing your charitable contributions ensures your donations have the greatest impact on both the charity and yourself. Always research organizations you wish to support using tools like Charity Navigator and GuideStar.
Incorporating charitable giving into your financial plan allows you to support causes you care about while benefiting financially. At Victory Wealth Services, we are here to guide you through smart financial planning to maximize your impact. Together, we can make giving back part of your financial future, helping you Live Your Victory™.
Victory Wealth Services, LLC is an investment adviser registered in Arizona. Advisory services are only offered to clients or prospective clients where Victory Wealth Services, LLC and its representatives are properly licensed or exempt from licensure.
Get in touch for your complimentary Financial Strategy session today. Call 928.778.1050 or visit us online at www.victorywealth.com.