Supporting a cause you care about and reducing your tax burden is a smart and fulfilling financial strategy. Here are the key ways to do that effectively:

✅ 1. Donate to a Qualified 501(c)(3) Organization

To claim a tax deduction, ensure the charity is IRS-qualified (typically a 501(c)(3) nonprofit).

Tip: Use the IRS Tax Exempt Organization Search to verify eligibility.

✅ 2. Itemize Deductions

Charitable donations are deductible only if you itemize on your tax return (Schedule A).

• In 2024, the standard deduction is:
  • $14,600 (single)
  • $29,200 (married filing jointly)

If your itemized deductions (including mortgage interest, medical expenses, etc.) don’t exceed the standard deduction, consider bunching donations into a single year to itemize and maximize the tax benefit.

✅ 3. Donate Appreciated Assets (Instead of Cash)

Gifting stocks, ETFs, or mutual funds held for over a year lets you:

• Avoid capital gains tax
• Deduct the full fair market value

This is one of the most tax-efficient ways to give if you have appreciated investments.

✅ 4. Use a Donor-Advised Fund (DAF)

A DAF is like a charitable investment account.

• Contribute now (get the deduction today)
• Distribute to charities over time
• Donate appreciated assets, grow the fund tax-free

Great for long-term charitable planning.

✅ 5. Qualified Charitable Distributions (QCDs) [If 70½ or Older]

If you’re 70½ or older, you can donate up to $100,000/year directly from an IRA to charity. Benefits:

• Counts toward your RMD
• Excluded from taxable income (unlike a standard IRA distribution)
• No need to itemize

✅ 6. Keep Good Records

For donations:

• Under $250: Bank record or receipt
• $250 or more: Written acknowledgment from the charity
• Non-cash > $500: IRS Form 8283 required
• Non-cash > $5,000: May require a qualified appraisal