Planning charitable donations for tax benefits

Planning charitable donations for tax benefits

On Behalf of | Dec 8, 2022 | Charitable Giving, Tax Planning

Planned giving is an opportunity for people to make charitable donations in the future. Significant tax savings occur after the filing of annual tax returns. Many New York residents are becoming aware of the numerous benefits and options that they have for giving to their favorite charities.

Types of charitable donations

The type of donation does not consist solely of cash or a check. Donations are also made in the forms of stocks, bonds, trusts or tangible assets. Every charity has specific requirements for giving securities as donations.

Planned giving

Planned giving has important tax planning incentives as well. It allows you to plan to make important charitable contributions before your death.

Donors can set up trusts that go into effect years or decades later. The most popular option is to include a charitable donation that is activated after death. One or more charitable organizations can be added as beneficiaries in a will, trust, life insurance policy or retirement plan.

Tax benefits

The benefits of charitable donations include the ability to receive major tax savings. Itemizing deductions allows you to spend less on taxes based on a percentage of your adjusted gross income.

Planned giving allows donors to plan for their financial futures. They can improve the planning of their estates by including donations in a will, trust or other long-term financial plan. Planned giving allows them to increase the number of charitable contributions that they make over time. Through proper tax planning, donations reduce the amounts of federal and state income and estate taxes. In the end, charitable giving increases tax savings and increases each donor’s overall wealth.

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