What Does Giving Mean To You?

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As the holiday season approaches, many of our clients are thinking of gifts. As you approach budgeting and planning for gifts of all sorts and sizes, it’s important to first think about what GIVING means to you. For some, that will bring up a sense of love and caring. For others, “giving” could conjure the notions of responsibility or duty, or even the hope of influencing some kind of outcome. Understanding your motivations can help guide how and what you will give. Whether you’re considering charitable donations or gifts to family members, we can help you with the process of making those decisions.


There are multiple approaches to consider when making a gift that will have different tax consequences. Some tax-smart strategies for charitable giving that we can discuss with you include:

·       Contributing appreciated non-cash assets instead of cash

·       Using a part gift, part sale strategy to offset capital gains tax from investment portfolio rebalancing

·       Combining two years of contributions into 2022

·       Making a Qualified Charitable Distribution (QCD) of Individual Retirement Account (IRA) assets

·       Using a charitable deduction to help offset the tax liability on a retirement account withdrawal

·       Using a charitable deduction to help offset the tax liability from converting a retirement account to a Roth IRA

·       Using a charitable deduction to help offset the tax liability from converting a retirement account to a Roth IRA

·       Opening a donor-advised fund account now, while taxes are top of mind, and make tax-deductible contributions at any time before the end of the year



Besides wanting to ensure that a charity’s mission aligns with your personal values, you want to know that an organization is run efficiently and effectively, so that your gift can be used well. Websites like www.charitynavigator.com or www.givewell.com can help you research charities that you are considering in order to make an informed decision.


For 2022, the gift tax exclusion is $16,000, per beneficiary (or $32,000 if married, filing jointly), and there is no limit to gifting assets to a spouse if that person is a U.S. citizen. Some, but not all, education or medical expenses, are also exempt from the gift tax. Tuition is allowed, but not books and fees.

Gifted assets to pay for education or medical expenses, must be paid directly to a healthcare facility, insurance company, or school. Establishing or giving to a 529 plan can offer some tax benefits as well.

For giving to minor children, cash is simplest, but custodial accounts allow the giver/custodian to retain control of the  funds until the child reaches majority age of their state. Income recognized in a child's UTMAs or UGMAs has the benefit of being taxed at the child’s tax rate, as opposed to yours. A revocable trust is another method to maintain control over gifts by the donor/grantor.

Keep in mind your estate tax exemption and the annual gifting limit. The current estate tax exemption is $11.58 million per person and is set to sunset at the end of 2025. Beginning January 1, 2026, the exclusion amount will be decreased to approximately $6.4 million per person