Even though it does not feel like fall yet, the High Holidays make clear that winter is not far away. Now is a great time to review your financial picture, tax planning strategies, and philanthropic goals. It is also a great time to consider how you can make an impact in our community TODAY and TOMORROW while maximizing your tax savings.
The following are some ways to do good and be tax-smart. We encourage you to discuss these and other strategies for your philanthropy with your tax and financial professionals.
Donate Appreciated Non-Cash Assets Instead of Cash
One of the most effective strategies for giving with maximum charitable impact and minimizing taxes is to donate appreciated non-cash assets held longer than one year. Donors can pay their Federation Annual Campaign Pledge, create an endowment, open a Donor Advised Fund, or make a gift to the charities they care about and avoid the capital gains tax they would otherwise incur if they sold the assets first and donated the proceeds. These gifts should be initiated no later than December 15, 2022.
TIP: To ensure your gift is processed quickly and effectively, inform the Federation or Foundation of the type of stock you are donating and the amount before making your gift.
Open or Replenish a Donor Advised Fund (DAF)
A Donor Advised Fund with Richmond Jewish Foundation is a powerful way to streamline and strengthen your philanthropy while easing the burden at tax time. Donor Advised Funds allow you to recommend grants to your favorite non-profit organizations, while Richmond Jewish Foundation manages the administrative paperwork. If you are considering making significant donations to charity over time but want a deduction today, add funds to an existing Donor Advised Fund or open a new one. It can be especially beneficial to donate appreciated property; this eliminates capital gains taxation for the contributed assets.
Bunch Your Donations
Accelerate your giving by combining or bunching 2022 and 2023 charitable contributions into this year, itemize deductions on 2022 tax returns and take the standard deduction on 2023 tax returns.
In addition to achieving a large charitable impact in 2022, a bunching strategy could produce a larger two-year deduction than two separate years of itemized deductions – depending on income level, tax filing status, and giving amounts each year.
Designate your IRA Required Minimum Distribution (RMD) through
a Qualified Charitable Distribution (QCD)
Whether itemizing deductions or taking the standard deduction, individuals aged 70½ and older can direct up to $100,000 per year from their traditional IRAs to operating charities through QCDs. The QCD can be used to satisfy all or part of the donor’s RMD for 2022 and is not considered taxable income for the donor.
NOTE: Two individuals who submit tax returns with married filing jointly status each qualify for an annual QCD of up to $100,000. Also, RMDs cannot be considered a QCD if they are directed to a DAF.
Support Jewish Education and get a Virginia State Tax Credit
Virginia’s Education Improvement Scholarships Tax Credits (EISTC) Program offers a 65% tax credit to individuals and businesses who donate to the Richmond Jewish Foundation’s Education Tax Credit program. Tax credit-eligible donations provide scholarships for low-income students at Jewish schools. Individual or business donors receive a state tax credit equal to 65% of the donation.
The minimum donation amount is $500. The maximum donation amount for individuals is $125,000. There is no maximum limit for any business entity.
Individuals can use the tax credits against their Virginia personal income tax liability.
In addition to a 65% tax credit, individuals and businesses may also receive a deduction for a charitable contribution.
Leave a Legacy
Creating a new legacy commitment or formalizing an existing legacy ensures that your vision and generosity will impact lives in our Jewish community long after your lifetime. Contact your Life & Legacy Chair or the Richmond Jewish Foundation to discuss how an endowment gift can permanently support our local organizations and synagogues.