Tax Advantages Through Charitable Giving

June 19, 2025 | by Atherton & Associates, LLP

Charitable Giving – Strategically Supporting the Causes You Care About

June 19, 2025
From the Emily Ryland, CPA, Senior Tax Associate

Charitable giving is a meaningful way to support the causes you care about and when done strategically, it can also offer valuable tax advantages. With thoughtful planning, charitable contributions can reduce your taxable income, help you avoid capital gains taxes, and even satisfy required minimum distributions (RMDs) in retirement. Understanding how charitable contributions affect your tax situation is key to maximizing both your impact and your deductions.

Tax Deductible Contributions

·       Cash donations are deductible up to 60% of your adjusted gross income (AGI).

·       Non-cash donations, like appreciated stocks or real estate, are generally limited to 30% of AGI, with unused amounts eligible to carry forward for up to five years.

• To deduct charitable contributions on your tax return, you must itemize your deductions using Schedule A.

·       If your total itemized deductions don’t exceed the standard deduction, you may not receive a tax benefit for your donation.

Qualified Charitable Organizations

• To claim a tax deduction, your donation must go to a qualified charitable organization.
• Qualified charities include most religious, educational, and medical institutions, as well as recognized public charities and foundations.

Record Keeping

·       For any cash donation over $250, you’ll need a written acknowledgment from the charity.

·       Non-cash donations over $500 require Form 8283, and high-value gifts may require a qualified appraisal.

Qualified Charitable Distributions (QCDs)

·        For individuals aged 70½ or older, Qualified Charitable Distributions (QCDs) from IRAs provide another powerful giving strategy.

·        Taxpayers can transfer up to $100,000 annually directly from their IRA to a qualified charity.

·        These distributions count toward required minimum distributions (RMDs) but are excluded from taxable income.

Strategic Giving Techniques

·        One of the most tax-efficient ways to give is by donating long-term appreciated assets, such as publicly traded stocks, directly to a qualified charity.

·        This allows you to avoid capital gains taxes while still receiving a deduction for the asset’s full fair market value.

·        Other strategic giving techniques, such as bunching multiple years’ donations to exceed the standard deduction or contributing through a donor-advised fund (DAF) can further enhance tax efficiency.

Action Item

With careful structuring, donors can optimize deductions, reduce taxable income, and maximize the impact of their contributions. Please consult your tax advisor to ensure your 2025 giving strategy aligns with your financial goals.