Different Ways to Gift While Minimizing Your Taxes

“Hey Mike, what are smart ways to donate to charities?”

Discover different ways to lower your tax bills while getting more of your money to a church or charity.

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Episode Transcript

Mike (00:05):
Welcome to How to Retire On Time, a show that answers
your retirement questions. We'rehere to move past that
oversimplified advice you'veheard hundreds of times.
Instead, we're gonna get intothe nitty gritty here. Have some
fun. As always, text yourquestions to [phone].
And remember, this is just ashow, not financial advice.
David, what do we got today?

David (00:25):
Hey, Mike. What are some smart ways to donate to
charities?

Mike (00:30):
Generally speaking, you've got donations coming from two
buckets.
So I see people donating fromtheir IRA or donating from their
brokerage account, not reallytheir Roth. Roth is is like the
best account, so usually they'redonating to also be tax
efficient.

David (00:47):
Okay.

Mike (00:47):
Yeah. Okay? So with that, you need to understand you can't
donate from your IRA unlessyou're at required minimum
distribution age, and then youcan donate up to a certain
amount each year. From yourbrokerage account, there are
many different ways you couldstructure charitable gifting,
and you need to understand, isthis a one off gift? Are you

(01:08):
gifting to lower your taxes, andwould it really make a
difference, or would it not makea difference?
Are you looking to just you'reselling something big and you're
trying to offset some of thegains, then you might get into
more multiyear giftingstrategies like a charitable
remainder trust and so on. Sothe answer is there's too many
variables here to answer itcorrectly in my opinion. I don't

(01:31):
wanna give oversimplifiedadvice. I would say if it's a
one off or you want a long termstrategy, write down or
articulate your charitableintent, whether it's kind of a
whatever happens this year,we'll be open to it. Understand
your adjusted gross income andmodified adjusted gross income
and where the charitabledonations will come from, and

(01:52):
then get with someone thatunderstands taxes or can do tax
projections on if you donate ornot donate from the different
buckets, from the differentaccounts, from the different
investments, and how that mightwork to really just understand
the tax implications of it.

David (02:07):
Yeah. Is this a deduction? It's not a credit
when you give

Mike (02:10):
Not a credit. It's a deduction. So you're only
getting 20¢ back on every dollarthat you give if it's from a
brokerage account, maybe, butyou have to itemize. And are you
gonna itemize? Are you not gonnaitemize?
So you need to understand that.And even if you don't itemize,
there is some part of it thatcan be taken off. There's some
updates on the one big beautifulbill on how this was gonna be

(02:30):
done. And then if you were todonate, we don't sell a stock.
You could gift a stock to acharity and have them pay the
capital gains.
There's so many variables here,and it all boils down to how is
it going to affect your tenforty. So I would just encourage
people, if you have charitableintent, which I hope that you
do, don't give more than you canafford. But, yeah, dive into the

(02:53):
details from a tax standpoint ofhere's how much I wanna gift
this charity or this church.Where's the best place to pull
it, and how do we make thattransaction happen so it's
favorable for your own taxablesituation? That's all the time
we've got for the show today.
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(03:13):
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(03:34):
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