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It’s Tax Season! Have You Considered These Giving Scenarios?

Tax season is one of the few times of the year when clients are particularly focused on financial planning. As an attorney, CPA, or financial advisor, you have a valuable opportunity to integrate charitable giving strategies into your tax conversations. Thoughtful planning can help clients maximize their impact while optimizing tax benefits—not just for this year but for years to come.

Plan Ahead for Qualified Charitable Distributions (QCDs)

If: Your client missed the deadline for a Qualified Charitable Distribution (QCD) in 2024.

Then: Now is the time to start planning for 2025. First, confirm whether your client took their Required Minimum Distribution (RMD) for 2024 if they were required to do so. Then, consider establishing a plan to execute QCDs early in the year.

QCDs allow clients aged 70 ½ or older to direct up to $105,000 per year (as of 2024) from an IRA to a qualified charity, avoiding taxable income while fulfilling their charitable goals. However, last-minute planning can create unnecessary complications. The transaction must be completed by December 31 to count for that tax year, and waiting too long can lead to missed opportunities.

Early execution of QCDs also helps avoid the negative effects of the “first-dollars-out rule,” ensuring the distribution counts toward the client’s RMD. Additionally, QCDs can be used to fund designated, field-of-interest, or unrestricted funds at the community foundation, helping donors support causes they care about while managing their tax liabilities effectively.

Think About Business Succession Planning

If: Your client is considering exit strategies for a closely held business.

Then: Reach out to the community foundation as soon as possible. Timing is critical when structuring gifts of business interests for charitable purposes.

Clients planning to sell their business can benefit greatly from gifting shares of closely held stock to a charitable fund before a sale agreement is in place. When structured correctly, this allows for tax advantages:

• The client receives a charitable deduction for the fair market value of the donated shares.
• The gifted portion of the business avoids capital gains tax upon sale.
• The sale proceeds flow into a charitable fund, which can be used to support causes the client cares about.

Remember that if a sale is already in progress when shares are donated, the IRS may view the transaction as a prearranged sale and jeopardize the tax benefits.

Consider Gifts of Appreciated Stock Early in the Year

If: Your client’s stock portfolio experienced strong gains last year.

Then: Encourage clients to explore donating appreciated stock sooner rather than later.

Gifts of publicly traded stock to a charitable fund can be one of the most tax-efficient ways for clients to give. When donating appreciated securities held for more than one year, clients can receive a charitable deduction for the fair market value of the stock while avoiding capital gains tax on the appreciation.

Many donors wait until year-end to make these gifts, but in a volatile market, it may be beneficial to act sooner. If stock positions are currently high, donating now may allow clients to lock in tax benefits while maximizing charitable impact.

Through the community foundation, clients can establish a donor-advised fund or contribute to other types of charitable funds, allowing them to distribute their giving strategically over time while receiving immediate tax benefits.

Your Partner in Strategic Charitable Giving

Tax season is a prime opportunity to discuss charitable giving strategies that benefit both your clients and the causes they care about. The Athens Area Community Foundation is here to support you. If you have a client considering charitable giving, let’s talk. Even if our tools aren’t the perfect fit, we’ll help you find the best path forward. Reach out today to explore how we can collaborate to create meaningful, tax-savvy philanthropic solutions.