7 Reminders to Get Ahead of the Year-End Rush

As the year winds down, holidays and tax planning are once again top of mind. No doubt clients are starting to reach out to finalize their tax planning strategies. Now is a great time to revisit key charitable giving techniques and important deadlines to ensure you’re prepared for these crucial conversations with your clients and our team at the Community Foundation. We’re here to support you. 

1. Standard Deduction Reminders

Remember that the 2024 standard deduction for single taxpayers is $14,600, and married filing jointly is $29,200. While this allows for more relief from income tax for most filers, it also sets a higher bar to exceed for those who itemize deductions. Keep your client’s standard deduction amount in mind when you tally deductible expenditures, including gifts to charity. Reach out to the Community Foundation for help.  

2. Itemization and Bunching

If total deductions are at or under the standard deduction amount for 2024, but you determine that your client’s particularly high income this year means they could benefit from increased deductions, a “bunching” strategy may be a good fit. “Bunching” means you are “front-loading” charitable donations into the current year, knowing that your client plans to make these donations in future years. By structuring a large year-end gift to a donor-advised fund at the Community Foundation, you could surpass the standard deduction threshold to further reduce taxes in 2024. Then, your client’s favorite organizations can receive support from their donor-advised fund not only this year, but also in subsequent years. This makes things easy for your client and provides predictable, steady support for the causes they love. Our team can help you build a strategy. 

3. Stock, Not Cash!

As you prepare your clients for year-end giving, remind them not to automatically reach for the checkbook. Gifts of long-term appreciated stock to a donor-advised or other type of fund at the Community Foundation is always one of the most tax-savvy ways to support your favorite charitable causes because capital gains tax can be avoided. Similarly, if you work with business owners, they can work with you and the Community Foundation team to explore how they might give shares in the business to a fund at the Foundation as a part of their overall estate plan. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if they held the shares for more than one year), but also these gifts could potentially reduce income tax burdens triggered upon a future sale of the business. Read more about the benefits of closely-held stock.

4. QCDs from IRAs

As always, keep in mind that the Qualified Charitable Distribution (QCD) is a very smart and tax-savvy way to encourage philanthropy among your clients. Clients over the age of 70½ can direct up to $105,000 from an IRA to certain charities and funds, including unrestricted/discretionary, field-of-interest, designated, scholarship, or giving circle funds at the Community Foundation. If your clients are subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means clients avoid income tax on the funds distributed to charity. Additionally, up to $50,000 from a QCD can be used to create a Charitable Gift Annuity. Our team can work with you and your clients to go over the rules for QCDs and evaluate whether the QCD is a good fit.  

5. Fingers Crossed on Deduction Legislation

Continue to keep an eye on the Charitable Act, which, if passed, would permit a deduction for charitable gifts that exceed the standard deduction. The Charitable Act proposes to restore the pandemic-era “universal charitable deduction” and raise the cap from $300 for individuals ($600 for joint filers) to approximately $4,600 for individuals ($9,200 for joint filers). This could be a game-changing incentive for your favorite charities — and for your clients.

6. Don’t Miss Community Foundation Year-End Deadlines

We’re here to support you in planning ahead for year-end giving. Unless noted, take action on these opportunities by December 9: 

• Grant requests from advised funds and Charitable Checking Accounts^SM to support your and your clients’ favorite charities.  
• Complete the transfer of stock gifts and alert us so we can properly credit your or your clients’ account. Gifts of marketable securities also need to be fully transferred by December 31. Privacy rules prevent some brokers from identifying donors. Email StockProcessing@racf.org or call Andrew Muldoon at 585.341.4360 with the stock name and share count. We cannot accept shares of foreign stock after November 27 because their complexity makes it difficult to settle by year-end.  
• Get your clients tax-advantaged income for life while making a significant gift to a permanent fund in the future with a charitable gift annuity (CGA). As with bunching, larger gifts may make itemizing worthwhile despite the higher standard deduction. As mentioned above, your clients can create a CGA with a QCD of up to $50,000.  
• Mutual fund gifts take more time to settle, so start the process by November 22.   
• Mailed checks must be postmarked or hand delivered by December 31 to count in 2024. For an easy drop-off at our office, use the mail slot in the door of the “in” driveway.   

7. Give a Child a Memorable and Happy Holiday

Looking to give back and feel good this holiday season? Consider a gift to the Hubertus and Helmi Behrla Endowment Fund at Rochester Area Community Foundation, which helps bring holiday cheer to children most in need throughout our eight counties. Last year, the fund distributed nearly $10,000 to nine agencies, which were then able to leverage this funding alongside gifts from other individuals, organizations, and church groups to provide holiday toys to more than 1,500 local children. If you or your clients would like to contribute, you can make a gift online with a credit card. For more details, contact Nikia Washington at nwashington@racf.org.