There are several ways that you can reduce your taxes when contributing to qualified charitable organizations, so long as you are able to itemize your tax deductions.
Establish a Donor-Advised Fund – Tax law changes may have adversely impacted your ability to itemize your annual charitable donations. You might consider establishing a Donor-Advised Fund (DAF), which allows you to bunch charitable deductions that you typically take each year into one year to take advantage of a larger tax break. You receive a tax deduction in the year you contribute, even if you choose to distribute the money in the future. These funds grow tax-free until you recommend a grant to the qualified charity.
Make a charitable gift from your IRA – Through a qualified charitable distribution (QCD), you can use your tax-deferred Individual Retirement Account (IRA) to make donations to a qualified charitable organization and satisfy your required minimum distribution (RMD), thus not having to pay the taxes on your retirement savings and fulfilling your charitable intent. You must be 70.5 years of age to do this.
Donate securities to reduce capital gains taxes – If you have a brokerage account with securities like stocks, bonds, etc. that have appreciated significantly over more than a year, they could be donated to a qualified charitable organization that will eliminate the capital gains tax you would have otherwise paid if you sold the security and donated the cash.
