By Amy Ryan, director of mission advancement
As the end of 2022 approaches, we hope this note finds you well and preparing for a fulfilling finish to another challenging year. While this is often a time of great activity, it can also be a time of important reflection.
Here are some tips to help you make the most of your year-end giving:
- Determine your tax liability for the year.
Before the hustle and bustle of the holidays takes over, consider pausing to calculate your income and determine your tax liability for the year. Did your income increase? Did you sell any appreciated assets? Will you owe more taxes? If so, this alone may motivate increased giving before December 31.
The standard deduction limits for 2022 tax returns are:
2022 Standard Deduction Levels
| Single | Head of Household | Married Filing Jointly |
| $12,950 | $19,400 | $25,900 |
How do your eligible itemized expenses (charitable giving, mortgage interest, state and local taxes being the most common) stack up? Did you shift from being an “itemizer” last year to a “borderline itemizer” this year? If your itemized expenses are close to any of the standard deduction thresholds, you may find it advantageous to increase your giving before December 31 and then consider filing an itemized tax return every other year. This is sometimes referred to as a “bunching strategy” – advancing philanthropic giving from 2023 to occur in 2022 in order to meet or exceed the standard deduction limit.
In this scenario, you can itemize your 2022 tax returns and then take the standard deduction the following year.
Evaluating this now is important. By the time you complete your income tax return, it will be too late to make charitable gifts for the previous year. Take the time now to do some planning while you still have the opportunity to make adjustments and also make a year-end impact on a mission you value.
- Review your investment portfolio.
As year-end approaches, it’s a good idea to review your portfolio. In particular, it’s worth looking at the stocks you have held for more than a year to identify those that have appreciated in value. Which ones have appreciated the most, despite market volatility? It may be prudent for you to make your year-end gift using one or more of these appreciated stocks.
Here’s why…
If you sold the stock, you would incur capital gains tax on the appreciation. However, if you give the stock and allow Benedictine Life Foundation of Wisconsin, Inc. to sell it, capital gains taxes are avoided. You receive a charitable deduction for the full fair market value of the stock (subject to the deduction limits), just as you would if your gift were made with cash. If you can’t use all of the income tax charitable deduction resulting from the gift this year, you can carry it forward for as many as five additional years. The annual deduction limit for appreciated securities is 30% of Adjusted Gross Income (AGI).
The fair market value for securities is the average price per share between the highest and lowest selling prices on the date of delivery. For mutual funds, the fair market value is the price per share at market closing on the date of delivery.
Giving from depreciated securities may make sense as well. If you own securities worth less now than when purchased, you can sell them and contribute the cash proceeds. This way, you can take a capital loss on your return, which you can’t do if you donate those securities directly to Benedictine Life Foundation of Wisconsin, Inc.
- Identify additional tools at your disposal.
Your retirement account can be a very beneficial tool for charitable giving. In fact, donors who are age 70½ or older may directly transfer up to $100,000 per year from an Individual Retirement Account (IRA) to one or more public charities (other than a donor-advised fund), avoiding both income and estate tax. This is commonly referred to as a Qualified Charitable Distribution (QCD) or IRA Charitable Rollover. While assets that are held in a 403b or similar pretax retirement accounts do not qualify for QCDs, funds in those accounts can be transferred to a self-directed IRA and then distributed to a public charity as a QCD.
A traditional IRA owner must take a required minimum distribution (RMD) from a retirement account when that owner reaches 72 years of age. QCDs count towards satisfying the annual RMD, benefitting both the IRA owner and the charity. Giving through an IRA Charitable Rollover allows donors to reduce their taxable IRA balance while also benefitting the public charity(ies) of choice.
If you have an inherited IRA and are required to make a withdrawal, you can earmark all or a portion of the withdrawal for charitable giving and deduct it from your taxes as with any other charitable contribution.
- Do your giving early.
Giving early is especially important if you want to make a gift of non-cash assets (stock, real estate, etc.).
Your professional advisor or broker may be extremely busy as the year winds down. The sooner you can activate the gift process, the more likely you are to complete it before the year-end deadline and maximize its impact.
As you consider your end of year charitable giving priorities, you may benefit by considering these questions:
How much have I/we already given?
- to my place of worship
- to my school, college, or seminary
- to support health care and research
- to support social service organizations
- to other important organizations and missions
- total
Does this amount meet/exceed my/our intended target for charitable contributions for the year? Have my/our circumstances changed in a way that I/we can contribute more?
- Talk to your advisors.
Before making any significant gift to the Benedictine Life Foundation on behalf of Benedictine Women of Madison or to any other nonprofit organization, you should have your CPA, attorney, and/or financial advisor help you understand the impact of your gift on your income tax return and estate plans. We at the Benedictine Life Foundation want your giving to be prudent, generous, and a joyful experience.
We can help. As you can see, your tax benefits depend on what you give and when you give it. We can assist you and your financial advisors with the planning and details of making a gift to help support our mission. We appreciate your support, so we’ll do all we can for you in return. Please remember to consult your professional advisors before you make a gift.
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As the season of reflection and generosity approaches, please accept the thanks of the Holy Wisdom Monastery community of communities for your generous support of the sisters and Holy Wisdom Monastery through the Benedictine Life Foundation of Wisconsin, Inc.
For more information about the year-end giving opportunities at Holy Wisdom Monastery, contact the mission advancement team at 608-836-1631, x120 or hwm@holywisdommonastery.org. You may also visit our website at www.holywisdommonastery.org for more information or to make a gift online.
Please use our confidential reply card, share your intentions by mail/email, or call our offices if we can be of service in any way. We are here to help you in any way we can.
May 2023 bring you and your family health, happiness, and prosperity!