Year-End Charitable Donation Checklist

Things to Consider at Year-End

December is here, the time for holiday parties, family gatherings, and a toast to a new year to come. However, before the year is over, you may feel compelled to donate your money, property, or even time to a qualified organization. Giving to causes we support not only enriches our communities but can also provide tax benefits if done correctly.

Below are some topics and options to consider when making your year-end gifting decisions.

Should I itemize my deductions?

The first thing to consider is whether you will be itemizing your deductions in 2024. The IRS has increased the standard deduction for the year to $14,600 for single filers, $29,200 for married filing jointly, and $21,900 for heads of household.
 Suppose your itemized deductions (unreimbursed medical/dental expenses in excess of AGI limits, state/local taxes, property taxes, mortgage interest, and charitable contributions) do not exceed your applicable standard deduction threshold. In that case, you will default to the limits set above. It is best to consult with your tax professional on how much you would need to give in qualified charitable contributions to exceed these standard deductions.

Limitations

The following item to consider is what type of donation you are making. For example, if you are making donations of cash to public charities and certain private foundations, your limit would be subject to 60% of your Adjusted Gross Income (AGI). In contrast, if you donate appreciated assets (generally publicly traded stocks), the limit is subject to 30% of your AGI.
 
The Tax Exempt Organization Search can help you consider the different limitations each of these donations will be subject to.

Record Keeping

It is essential to keep detailed records of all your charitable giving. These would include receipts, written acknowledgements from the organizations, and other communications. It is best to have, at a minimum, the name of the organization, the amount you gave, and the date you contributed. The IRS can disallow any contributions of $250 or more if you lack the proper documentation.

Choosing a Charitable Organization

To ensure tax benefits, your donation should go to a verified 501(c)(3) organization in good standing with the IRS. You can use the IRS's charity search tool or a charity navigator, such as GuideStar, to search for nonprofit organizations and confirm their tax-exempt status and filings, such as their annual Form 990 and other public information.

Ways to Give

Cash Gifts

Cash is probably the simplest way to donate. You can give online or by mailing a check directly to the nonprofit organization of your choice.

Appreciated Stock

If your stocks have appreciated considerably since you purchased them, you may consider donating stock directly to a charity. This option has a couple of potential upsides:
 Appreciated stock gifts are often better than if you sell the stock and then make a cash donation, because there is no capital gains tax on stock donated directly to charity. Additionally, a stock donation could be used to reduce investment concentrations when the capital gains tax is a barrier to selling.

Qualified Charitable Distributions (QCDs)

As discussed in our prior blog, "7 Financial Planning Strategies for Year-End," there is a way for those 70 ½ or older to give to charities from their IRA. Distributions from an IRA are typically taxed at ordinary income tax rates. However, if you can gift from your IRA directly to a qualified charitable organization, these distributions would be excluded from your taxable income. This is especially beneficial for those currently taking required minimum distributions (RMDs).
 
 The exclusion of your taxable IRA distribution can often be more effective than taking a charitable deduction for the contribution. QCDs are limited to $100,000 or less annually.

Donor Advised Fund (DAF)

Our final topic for consideration would be a donor-advised fund. A donor-advised fund is a charitable investment account designed solely for the purpose of supporting a charitable organization. This strategy can be a good solution for individuals who have not yet identified a specific organization to which they would like to make a gift.
 
 By setting up a donor-advised fund, you can make a larger lump-sum contribution and receive the tax deduction for the full amount in the same year. You can then identify the organization(s) and amounts of distributions at a later date.

Understand Your Options

Knowing what charitable giving strategy is best for you is a matter of trust. That's our name. Please consult with one of our relationship managers if you have questions about year-end charitable contributions or would like to discuss a strategy for 2026. Connect with us when you're ready.
 
 
This material is for informational purposes only. First Financial Trust does not provide tax or legal advice. The content herein is not a substitute for professional advice, and customers are encouraged to consult with qualified tax and legal professionals regarding specific situations.