Tax time has its silver linings!
Going over tax returns with your clients can help start a productive conversation about ways to plan gifts to charity more effectively. As you scan 2023’s charitable contributions, talk with your clients about whether those charitable gifts were made with cash or with other assets and then steer the conversation toward discussing the most effective assets to give to charity during 2024 and beyond.
Here is a four-point checklist that can help you advise your clients about the range of charitable giving options.
- Remind clients that cash is not king when it comes to charitable giving. Cash is typically not the most tax-effective form of charitable giving. Instead, encourage clients to consider giving highly-appreciated assets, including publicly-traded stock, to their fund at the community foundation to support their favorite charities.
- Think even beyond stock. Encourage clients to explore not only highly-appreciated stock as a potential gift to charity, but also the various forms of “non-cash” assets that can make great charitable gifts. After all, American households’ most valuable assets are retirement accounts and personal residences, not cash. Examples of assets that could be excellent charitable gifts depending on the client’s circumstances include gifts of real estate, closely-held stock, and, for clients who are age 70 ½ and older, direct transfers from an IRA (known as a Qualified Charitable Distribution) to a field-of-interest or unrestricted fund at CFHZ.
- Make it easy on yourself and your client. Reach out to the team at CFHZ for assistance! We are happy to help you and your client evaluate the best assets to give to achieve the client’s charitable goals.
- Close the loop on IRS reporting. The reporting requirements are different for non-cash gifts to charity versus cash gifts. IRS Form 8283 must be filed with any tax return claiming a deduction for non-cash assets valued at $500 or more. The IRS expects strict adherence to the terms of the form, especially the requirement for a qualified appraisal. On our end, CFHZ will handle the confirmation of receipt and a commitment to document and notify the IRS if disposition occurs within three years.
Opening up the full range of charitable giving options for a client can help you structure a holistic estate and financial plan that meets the client’s objectives for family wealth, philanthropy, and tax effectiveness. During this busy season, we are grateful for your partnership assisting your clients to achieve their charitable goals!
We always encourage donors to first seek the advice of their legal, financial, or tax advisors when considering a gift of non-cash assets. While our team does not offer tax advice, we stay knowledgeable on charitable giving strategies. Please contact Colleen Hill, Vice President of Development & Donor Services, at chill@cfhz.org or by calling 616–994–8853 if we can help you serve your clients.