End of Year Tax Planning

The below information is meant to serve as a guide for preparing your year-end charitable giving. The Sheldon recommends that you consider your financial portfolio and consult with a financial advisor while considering your charitable donations for the 2021 year.

Charitable Donations of Cash

Charitable donations of cash may offset large portions of taxable income. The 2021 tax year will likely be the last year to elect to use a charitable donation of cash to offset 100% of adjusted gross income. This may provide an opportunity for taxpayers who are in a position to make a significant charitable gift.

Gifts of Stock

With continued market changes and possible increase to the capital gains tax rates, charitable donations of appreciated assets are more valuable than ever. By making a year-end gift of stock  the donor receives not only a deduction but also the potential of avoiding higher capital gains tax.

IRA Charitable Rollovers and Alternatives

For donors over the age of 70.5 the IRA charitable rollover can satisfy a Required Minimum Distribution without incurring income tax, even without itemizing deductions.

For others who have reached the age of 59.5 and can withdraw from a retirement plan without penalty, cash contributions can offset 100% of adjusted gross income.  This year you may withdraw cash in any amount from an IRA, 401(k), or other retirement plan and offset the income with a cash contribution.

Consider Creating or Donating to a Donor Advised Fund

This year, consider creating or donating to a Donor Advised Fund for maximum flexibility.

Donor Advised Funds are especially beneficial because while you receive your deduction today, you can make a long-term and significant donations over time. You may find more information about Donor Advised Funds here.