5 Tax Tips for Charitable Giving That Can Save You Money
Giving to charity feels good—but it can also be smart financial planning. At Cool Wealth Management in Phoenix, Arizona, we help individuals and business owners maximize their charitable impact while minimizing their tax liability. Whether you're donating cash, appreciated assets, or setting up a donor-advised fund, charitable giving can play a valuable role in your overall tax strategy. Below are five tips to help you give more effectively and keep more of your money working for your financial future.
1. Donate Appreciated Assets Instead of Cash
If you’ve held stocks, mutual funds, or other investments for more than a year, donating them directly to a qualified charity allows you to avoid paying capital gains tax and claim a deduction for the full fair market value. It’s a double win for your portfolio and your tax return.
2. Use a Donor-Advised Fund (DAF)
A donor-advised fund allows you to make a large, tax-deductible donation in one year, then distribute gifts to charities over time. This can be a powerful tool if you have a high-income year or want to simplify your giving while maintaining flexibility.
3. Consider Qualified Charitable Distributions (QCDs)
If you’re 70½ or older, you can donate directly from your IRA to a qualified charity—up to $100,000 per year. This Qualified Charitable Distribution (QCD) counts toward your Required Minimum Distribution (RMD) and isn’t included in your taxable income, making it a great option for retirees looking to give back.
4. Bunch Donations for Bigger Deductions
With the higher standard deduction, many people don’t itemize anymore—but that doesn’t mean you should stop giving. Consider bunching two or three years’ worth of charitable donations into one tax year to exceed the standard deduction threshold and receive a larger tax benefit.
5. Keep Good Records and Get Receipts
Even if your heart’s in the right place, the IRS wants documentation. For donations over $250, you need a written acknowledgment from the charity. If you’re donating non-cash items, be sure to assess and record fair market value properly. Your tax preparer (and future self) will thank you.
Final Thoughts
Charitable giving is about more than just writing checks—it’s an opportunity to align your values with your financial goals. With a smart strategy, you can reduce your tax burden and make a bigger impact.
If you're in the Phoenix area and want to explore how charitable giving fits into your overall financial plan, reach out to us at Cool Wealth Management. We’re here to help you give with purpose—and save with confidence.
