If this, then that: Scenarios to consider as tax time approaches
Tax season is a great time to cover tax planning strategies for the current year and beyond, and there are a few specific reasons why your clients may benefit from a conversation earlier in the calendar year.
Evaluate QCDs sooner rather than later.
If: Your client missed the 2024 deadline for a Qualified Charitable Distribution.
Then: After confirming that your client took an RMD for 2024, start planning now for a 2025 QCD. QCDs are an excellent tool for those who’ve reached the age of 70½ to give to a designated or field of interest fund (donor advised funds are not eligible), but if your client waits until the last minute at year-end, there might not be time for the transaction to be completed by December 31 as required.
Watch for charitable giving opportunities in business succession planning.
If: Your client is beginning to consider exit strategies for a closely held business.
Then: Reach out to GCF right away. Gifts of closely held stock to a charitable fund can be a very useful component of a business succession plan. A client can gift shares of the business, which in turn means that no capital gains tax will apply to the gifted portion when the business eventually sells. The proceeds of the gifted shares then flow into the fund to be used for your client’s charitable priorities. Further tax advantages may include a fair market value tax deduction. Keep in mind that timing is crucial; if a deal is in the works at the time the shares are transferred to the charitable fund, the charitable deduction may not be valid.
Consider gifts of appreciated stock early in the year.
If: Your client’s stock portfolio made big gains last year.
Then: If certain stock positions are high right now, it’s worth considering whether a gift in the very near future could be a good move to maximize charitable dollars rather than waiting until the end of the year. As a reminder, gifts of stock to a public charity are eligible for a charitable deduction in the amount of the stock’s fair market value at the time of transfer. When the stock is sold so that its proceeds can be deployed to further your client’s charitable goals, no capital gains tax will apply.
Our goal is to be your go-to sounding board for any client situation where charitable giving is an option. In many cases, we can help. But even if our tools are not a fit, we will point you in the right direction!
