Consider opening a Donor-Advised Fund with a bunching strategy
If you are unsure what causes to support, you may want to consider opening a donor-advised fund, which lets you get a tax deduction in the year you make the gift and then decide on which charities to support later. One strategy you can benefit from is combining multiple years of intended gifts into one year: bunching strategy. This way you’ll get the full tax deduction now (in 2023) but can make grants over time to the charities of your choice. New donor-advised funds can be established by 12 Noon Friday, December 29.
Gift Your Qualified Charitable Distributions (QCD) from IRA
If you or your spouse are 70½ years of age or older, you or your spouse can each direct up to $100,000 of your traditional IRA each year by making Qualified Charitable Distributions to support charitable causes through TPF. Beginning at age 73, these QCDs can offset required minimum distributions, thereby lowering your taxable income. Learn more about qualified charitable distributions. To qualify:
- You must be 70½ or older at the time of your gift. If you reached age 70½ in 2020, 2022 will be the first year you are required to take RMD. If you have reached age 72 on July 1, 2023, you must take your first RMD (for 2023) by April 1, 2024, with subsequent RMDs on December 31st annually thereafter.
- The transfer must go directly from your IRA to TPF.
Direct gifts to TPF from your IRA can:
- Be an easy and convenient way to make a gift from one of your major assets.
- Be excluded from your gross income: a tax-free rollover.
- Count toward your required minimum distribution.
In 2023, since you can now only claim a deduction up to 60% of your Adjusted Gross Income (AGI) if you itemize, the value of making a QCD has increased as the tax savings on the gifted funds can offset the lost deductions. QCDs are another area that require careful planning and should involve your advisors.
Please note that a distribution to a donor-advised fund does not qualify for this special treatment. Please contact TPF Donor Relations Lead, Pinar Ozyurek at 646.530.8988 or [email protected] if you’d like to contribute IRA assets.
Consider Donating Appreciated Stock at the End of the Year
If your investment portfolio has prospered, you may want to consider making some of your year-end gifts with appreciated stock and open a DAF at TPF. No capital gains tax will be assessed on the donation and you will be eligible for a full fair market value tax deduction, subject to AGI limitations, all while diversifying your investment portfolio. You can achieve a greater impact by donating long-term appreciated securities. Compared to donating cash, or selling your appreciated securities, and contributing the after-tax proceeds, you may be able to automatically increase your gift value and increase your tax deduction.
How does it work?
It’s simple and easy.
Consider what stock has grown in value since you bought it.
An appreciated stock that is contributed to TPF is exempt from capital gains taxes. If you sold the stock and used the proceeds to write a check for your gift, you would potentially be liable for capital gains tax. When you claim a charitable tax deduction for your gift, the full fair market value of the appreciated stock on the transfer date is your gift amount.
An illustration of the value you would realize if you donated your appreciated stock to TPF appears below. (Note: To bypass long-term capital gains, you need to have owned the stock you select for gifting at least 366 days)
The original cost of the stock: $50,000
Potential federal long-term capital gains rate: 20%
The current value of the stock: $150,000
| Sell stock and donate proceeds | Donate stock to TPF | |
| Long-Term Capital Gains Tax | $20,000 | $0 |
| Charitable Contributions/Deduction | $130,000 | $150,000 |
The additional amount dedicated to the nonprofit organization is an average of $20K (the value of the capital gains tax).
The value to you is a higher tax deduction and a greater charitable gift.
What should I do to take advantage of this opportunity?
- Contact your broker. Every brokerage firm has a slightly different requirement. Make sure you check their end-of-year deadlines to make sure your gift transfers before the end of Friday, December 22, 2023.
- Notify TPF so we are aware of the pending transfer and identify where the funds should be directed. Please contact Pinar Ozyurek at [email protected] who will provide you with a stock transfer instructions document to share with your broker.
Note: This information is for educational purposes only and is not intended to be legal or financial advice. Please contact your own professional advisor for individual financial and legal advice.
For more information or if you have any questions, please contact TPF Donor Relations Lead, Pinar Ozyurek.
Please keep these important dates in mind to ensure your year-end gifts qualify for a charitable income tax deduction in the 2023 tax year:
- Checks sent via the U.S. Postal Service to the TPF office must be postmarked on or before Saturday, December 30, 2023.
- Checks sent via carriers such as FedEx, UPS, and DHL must be physically received at the TPF office on or before Thursday, December 28, 2023.
- Gifts of appreciated stock should be made by Friday, December 22, 2023. Please note that transfers of mutual funds may take additional time so early notification of these gifts will help ensure a smooth transfer. Contact TPF Donor Relations Lead, Pinar Ozyurek at [email protected] or call 646.530.8988 for assistance with stock gifts and wire transfers.
- All documentation for gifts of non-cash assets should be submitted as soon as possible and no later than Wednesday, December 6. This ensures the documentation will be reviewed by TPF’s Gift Acceptance Committee before the end of the year.
- Wire transfers of cash must be received no later than Friday, December 29, 2023. We recommend initiating the transfer no later than Friday, December 22, 2023.
- Online contributions may be made until midnight on December 31, 2023.
- Real estate gifts must-have title transferred on or before Friday, December 22, 2023.
Below you will see some recommendations and suggestions for your year-end giving.
Year-end grant recommendations deadline
Donor-advised fund holders may wish to recommend grants as part of year-end giving or as holiday contributions. In order for nonprofit recipients to receive grants in 2023, recommendations should be made by Friday, December 8, 2023 as long as the non-profit is a TPF partner in Turkiye or a tax-exempt organization in the United States. Donor-advised grant recommendations could be made by logging into your account online. Please note that the timing of donor-advised grants has no effect on your 2023 charitable income tax deductions since, for tax purposes, your charitable contribution was deemed completed at the time it was contributed to your donor-advised fund.
