Your Guide to 2023 Year-End Charitable Giving

TBF Year End Guide To Charitable Giving 2023

Your Guide to 2023 Year-End Charitable Giving

by Rev. Bill Gruenewald

As the year comes to a close, many of us are thinking about our year-end giving. This year has brought financial challenges for many people, but many charitable strategies can help when tax time rolls around. Now is a great time to review some charitable giving ideas and see if any make sense to implement before 2023 ends, especially as you think about supporting your church or other Baptist cause.


Charitable Deduction Limit

Cash donations can be up to 60% of AGI if you itemize deductions. However, contributions of appreciated non-cash assets held for over one year are limited to 30% of AGI.

Make a regular donation 

The easiest way to make a gift is to simply write a check or donate online (if your church has this capability). If your check is postmarked by December 31 or your online donation is processed by December 31 (note that the time of day may be important), you can take a charitable deduction for the gift, depending on your particular tax situation.

Batching contributions

For 2023, the standard deduction is $13,850 for individuals and $27,700 for couples. Overall, this is great for taxpayers, but it is harder to deduct charitable contributions if your overall deductions do not exceed the standard deduction.

One strategy around this issue is to “batch” your charitable contributions, meaning that you combine this year’s gifts with what you anticipate giving next year and make both contributions in 2023. You’re basically loading up two years of gifts in one tax year. Thus, you have a higher charitable amount to apply toward your deductions in 2023, which may yield better results than simply taking the standard deduction.  

Give Gifts of Appreciated Assets

Many people find themselves holding stocks, bonds, mutual funds, or real estate that have significantly increased in value. Selling these assets may create substantial capital gains for the owner.

However, rather than increasing your tax burden, you can donate the long-term appreciated asset to your favorite Baptist cause (i.e., assets held for more than one year that trigger a long-term capital gain). You get a deduction for the asset’s full market value, and the charity recognizes no gains when it sells the asset. Win-win!

Required Minimum Distribution (RMD) / Qualified Charitable Distribution (QCD)

For those with traditional IRA accounts, if you are aged 70 ½ or older and have other sources of income to draw upon, you can direct your IRA custodian to transfer a portion of your retirement assets up to $100,000 to a public charity as a qualified charitable distribution (QCD). The donation counts as part of your Required Minimum Distribution but is not included in your taxable income.

NEW for 2023

The Secure Act 2.0 allows individuals to direct one-time up to $50,000 QCD to a Charitable Remainder Trust or a Charitable Gift Annuity.

Donate cash from the sale of depreciated securities.

Taxpayers benefit from recognizing losses rather than gifting depreciated securities. Consider harvesting tax losses from your portfolio and donating the cash proceeds. In this way, you can recognize a tax loss that can offset any capital gains for the year or up to $3,000 of your ordinary income. You will also receive a charitable deduction for your cash donation. Tax-loss harvesting may be a popular strategy in 2023 as taxpayers seek to reduce their taxable income.

Establish a Charitable Trust

A charitable remainder trust is an irrevocable giving vehicle funded with a gift of cash or non-cash assets. Income beneficiaries receive payments from the trust for a term of years or life, and a public charity receives the remaining assets at the end of the term. The donor may claim a charitable deduction if they itemize in the year the trust is funded, and the deduction amount is typically based on the present value of the assets that will eventually go to the named charity.

A charitable lead trust is the reverse of a charitable remainder trust in that a public charity first receives an income stream from the trust for a term of years. The irrevocable giving vehicle is funded with a gift of cash or non-cash assets. Benefits to the individual who funds the trust will vary depending on the trust structure. After the income stream period ends, the trust’s remaining assets are distributed to an individual or multiple people.

Increase your charitable giving when you expect higher annual income.

Charitable donations are deductible and may reduce your taxable income. Consider increasing your charitable giving in years where your income is expected to be higher due to a liquidity event, stock options, capital gains, or Roth conversions.


Remember, when the ball drops on December 31, you will lose the ability to take advantage of these strategies for 2023. If any of these ideas interest you, begin the process now to ensure you allow plenty of time for the process to be completed by year-end.

The Tennessee Baptist Foundation is ready to answer any questions about these year-end tax strategies. Contact us any time at 615-371-2029. We would love to help.


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal, or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice for the reader. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.

 

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

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Your Guide to Year-End Charitable Giving [2022 Update]

Hands holding change with "make a change" note

Your Guide to Year-End Charitable Giving [2022 Update]

by Rev. Bill Gruenewald

As the year comes to a close, many of us are thinking about our year-end giving. This year has brought some financial challenges for many people, but there are many charitable strategies that can help when tax time rolls around. Now is a great time to review some charitable giving ideas and see if any make sense to implement before 2022 ends, especially as you think about supporting your church or other Baptist cause.  


For 2022:

Above-the-Line Deduction for Cash Contributions

  • If you currently use the standard deduction for taxes, you can claim an additional deduction of up to $300 (couples can claim up to $600) for cash donations to public charities this year.

Charitable Deduction Limit

  • In 2021, the CARES Act allowed 100% of AGI as a deduction limit for cash contributions. However, for 2022 this has now reverted back to limiting cash donations to 60% of AGI if you itemize deductions. 

Make a regular donation 

The easiest way to make a gift is to simply write a check or donate online (if your church has this capability). If your check is postmarked by December 31 or if your online donation is processed by December 31 (note that the time of day may be important), you may be able to take a charitable deduction for the gift, depending on your particular tax situation.

Batching contributions

For 2022, the standard deduction is $12,950 for individuals and $25,900 for couples. Overall this is great for taxpayers, but it does make it a bit harder to take advantage of deducting charitable contributions if your overall deductions do not exceed the standard deduction. 

One strategy around this issue is to “batch” your charitable contributions, meaning that you combine this year’s gifts with what you anticipate giving next year and make both contributions in 2022. You’re basically loading up two years of gifts in one tax year. Thus, you have a higher charitable amount to apply toward your deductions in 2022, which may yield better results than simply taking the standard deduction.  

Give gifts of appreciated assets 

Many people find themselves holding stocks, bonds, mutual funds, or real estate that have significantly increased in value. Selling these assets may create substantial capital gains for the owner. 

However, rather than increasing your tax burden, you can donate the appreciated asset to your favorite Baptist cause. You get a deduction for the full market value of the asset, and the charity recognizes no gains when it sells the asset. Win-win! 

Required Minimum Distribution (RMD) / Qualified Charitable Distribution (QCD)

For those with traditional IRA accounts, if you are aged 70 ½ or older and have other sources of income to draw upon, you can direct your IRA custodian to transfer a portion of your retirement assets to a public charity as a qualified charitable distribution (QCD). The donation counts as part of your Required Minimum Distribution but is not included in your taxable income.

Donate cash from the sale of depreciated securities

Taxpayers benefit from recognizing losses rather than gifting depreciated securities. Consider harvesting tax losses from your portfolio and donating the cash proceeds. In this way, you can recognize a tax loss that can offset any capital gains for the year or be used to offset up to $3,000 of your ordinary income, and you will receive a charitable deduction for your cash donation. Tax-loss harvesting may be a popular strategy in 2022 as taxpayers seek to reduce their taxable income.

Increase your charitable giving when you expect higher annual income

Charitable donations are deductible and may reduce your taxable income. You may consider increasing your charitable giving in years where your income is expected to be higher due to a liquidity event, stock options, capital gains, or Roth conversions.


Remember, when the ball drops on December 31, you will lose the ability to take advantage of these strategies for 2022. If any of these ideas interest you, begin the process now to make sure you allow plenty of time for the process to be completed by year-end. 

The Tennessee Baptist Foundation is ready to answer any questions you may have about these year-end tax strategies. Contact us any time at 615-371-2029. We would love to help.


Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More

Your Guide to 2020 Year-End Charitable Giving

Woman holding cash

Your Guide to 2020 Year-End Charitable Giving

by Rev. Bill Gruenewald

The year 2020 will be remembered as the year of COVID-19. It has presented many challenges to all of us. But even so, we’ve been encouraged to see that believers across Tennessee have remained faithful in their giving to Baptist causes, even in the midst of the pandemic. Before we flip the calendar to 2021, it’s a great time to review some additional charitable giving ideas and consider whether they would make sense to implement, especially as you think of ways to support your church or other Baptist cause. 

For 2020: Above-the-Line Deduction for Cash Contributions

  • The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) enacted in March 2020 includes an incentive for charitable donations. For 2020 only, taxpayers who do not itemize their deductions may claim a charitable contribution deduction of up to $300 for the taxable year for cash contributions made to a public charity that is not a supporting organization or donor-advised fund. This new provision does not permit an above-the-line deduction for unused charitable contributions carried forward from a prior year.
  • The CARES Act does not explicitly address whether couples filing a joint return may claim $300 each. We are not likely to have an answer until the instructions for the 2020 Form 1040 are published.

For 2020: Modification of the Charitable Deduction Limit

  • The CARES Act also expanded the limit on the deductibility of cash contributions made by individuals to a public charity during 2020 from 60% of adjusted gross income to 100% of adjusted gross income. The limit for noncash contributions remains at 30% of adjusted gross income.
  • As with the above-the-line contribution deduction for non-itemizers, the change in the charitable deduction limit does not apply to cash contributions made to a supporting organization or donor-advised fund.

Make a Regular Donation 

  • The easiest way to make a gift is to simply write a check or donate online (if your church has this capability). If your check is postmarked by December 31 or if your online donation is processed by December 31 (note that the time of day may be important), you may be able to take a charitable deduction for the gift, depending on your particular tax situation.

Batching Contributions

  • With the 2017 tax bill, Congress raised the standard deduction for individuals ($12,200) and couples ($24,400). Overall this is great for taxpayers, but it does make it a bit harder to take advantage of deducting charitable contributions if your total deductions do not exceed the standard deduction. 
  • One way around this issue is to “batch” your charitable contributions, meaning that you combine this year’s gifts with what you anticipate giving next year and make both contributions in 2020. You’re basically loading up two years of gifts in one tax year. Thus, you have a higher charitable amount to apply towards your deductions in 2020, which may result in a better result than simply taking the standard deduction.  

Give Gifts of Appreciated Assets 

  • With the improved financial markets, many people now find themselves holding stocks, bonds, mutual funds, or real estate that has significantly increased in value. Selling these assets may create substantial capital gains for the owner. 
  • However, rather than increasing your tax burden, you can donate the appreciated asset to your favorite Baptist cause. You get a deduction for the full market value of the asset and the charity recognizes no gains when it sells the asset. Win-win!

Required Minimum Distribution (RMD) / Qualified Charitable Distribution (QCD)

  • The CARES Act waived required minimum distributions for IRAs and retirement plans for 2020. However, you may still take the distribution if you want, or even have it paid to your church or other Baptist cause. Please note that not all charities are eligible to receive a QCD, so check with them before you make it. 

Remember, when the ball drops at midnight on December 31, you will lose the opportunity to take advantage of these strategies for 2020. If any of these ideas interest you, begin the process now to make sure you allow plenty of time for the process to be completed by year-end. 

From the Tennessee Baptist Foundation, we wish you the happiest of Christmas seasons as we celebrate Immanuel! 

Ready to get started?

You can reach us via phone at (615) 371-2029 or fill out this form.

Please note that the advice offered in this article is not intended to be construed as tax, legal or accounting advice. This material has been prepared for general informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice for the reader. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Everyone has an estate, but not everyone has a plan. Do you have a plan? Take our 10 minute estate plan audit to get started.

Learn More