The end of the year is a time of reflection and anticipation for the new year ahead, and 2023 is no exception. It’s also a time of deadlines.
Here are some important charitable considerations ahead of the last day of December. Thank you sincerely for your thoughtful consideration of the Sisters and our ministries during this holiday season.
Gifts of Cash or Other Assets
Gifts must be postmarked by December 31 to be eligible for a 2023 tax deduction.
Credit card donations, stock transfers, and gifts of securities must be received by 11:59 p.m. PST on December 31.
Assets that have increased in value offer tax advantages. If you itemize tax deductions, you may receive an income tax deduction up to the full market value as well as avoid capital gains tax on the appreciation.
A year-end distribution from your IRA can be advantageous. If you are 70 ½ or older, the IRS requires “Required Minimum Distributions” (RMDs) from tax deferred retirement accounts. A qualified charitable distribution (QCD) can satisfy your RMD for the year, up to $100,000, excluded from your taxable income.
You may enjoy 2 tax benefits with a gift of appreciated stock: 1) Avoid paying taxes on the appreciated value, and 2) Qualify for an income tax charitable deduction based on today’s market value, when you itemize.
To Do Complete all transfers by Dec. 31. This includes electronic transfer, hand-delivery of the securities or mailed stock and stock power (mailed separately for security).
Donor Advised Funds
Contribute to a DAF (Donor Advised Fund) and enjoy a tax savings on that amount when you itemize.
Complete the contribution by Dec. 31. You do not have to designate the funds this calendar year to receive the tax benefits.
Timing and Dates
US Postal Service, must be postmarked by December 31
FedEx or UPS, gifts must be received by the Sisters of Social Service by December 31
Credit Card, “Fully processed,” i.e., approved by the credit card issuer by Dec. 31
Wire Transfer, all funds must be received in SSS account by Dec. 31
Stock Gifts, shares must be received in SSS account by Dec. 31
Gifts of Land
With increases in value for real property, many donors will find a gift of appreciated property made in 2023 attractive. A gift of appreciated land provides two benefits for the donor; First, the donor may receive a charitable contribution deduction based on the fair market value of the land. Second, the charity is tax-exempt and able to sell the asset tax free. Therefore, if the donor donates the asset, the donor can bypass tax on the capital gain. For example, if the donor purchased development land ten years ago for $50,000 and the land is now worth $250,000, the donor would pay capital gains tax on $200,000 if he or she sold the property on their own. By giving the land to charity, however, the donor may receive a deduction for the $250,000 in value and bypass the tax on the $200,000 of potential gain.
BEST Practices, End-of-Year Planning and Leaving a Legacy to the Sisters
Update your will or living trust Ensure that your designations are still appropriate and your charitable intentions are noted.
Review your retirement plan beneficiaries Assess your named beneficiaries to ensure you’ve considered your loved ones and favorite causes.
Review your life insurance policy If you have a policy that is no longer a significant piece of your estate plan, consider making a gift by assigning ownership to The Sisters of Social Service or making us the beneficiary.
Information contained herein was accurate at the time of posting and is not intended as legal or tax advice. Particular thanks to the Archdiocese of Los Angeles and Jesuits West for their information contribution. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.