All I Want for New Year’s is to Finish My Tax Plan

While some holidays are recognized by family gatherings and gift giving, religious observance, or the clarion call of Mariah Carey on repeat in every store you step foot in, others seem (at least on the surface) less celebratory: the December 31st tax deadline.

But whether or not you celebrate any holidays towards the end of the year, the tax deadline can serve as a celebration of sorts – a reminder to plan your giving for today and years to come – and can bring you joy as you consider your impact on the causes and communities that are important to you.

You may already be in talks with your financial advisors to make sure your tax planning is in place, and it can help to familiarize yourself with some important year-end giving techniques and deadlines.

If you’re new to Brooklyn Org, consider the benefits of opening a Donor Advised Fund with us. If you’re already part of our community of fund holders, the tips below can also help you finalize your year-end giving plan and prepare for conversations with your family, attorney, accountant, and the team at Brooklyn Org.

1. Standard deduction reminders

Remember that the 2023 standard deduction for single taxpayers ($13,850) and married filing jointly ($27,700) is up nearly 7% over 2022. While this increase allows for more relief from income tax for most filers, it also sets a higher bar to exceed for those who itemize deductions. Keep your household’s standard deduction amount in mind when you tally your deductible expenditures, including your gifts to charity.

2. Itemization and Bunching

If your total deductions are at or under the standard deduction amount for 2023, but you anticipate that you could benefit from increased deductions due to a particularly high income this year, a “bunching” strategy may be a good fit for you. “Bunching” means you are front-loading charitable donations into the current year, knowing that you plan to distribute these funds in the future.

By structuring a large year-end gift to your Donor Advised Fund at Brooklyn Org, you could surpass the standard deduction threshold to further reduce your taxes in 2023. Then, your favorite organizations can receive support from your fund not only this year, but also in the future. Our team can help you build this giving strategy to allow you to provide predictable, steady support for the causes you love.

3. Stocks vs. Cash

As you prepare for year-end giving, don’t automatically reach for the checkbook! Gifts of long-term appreciated stock to your fund at Brooklyn Org are one of the most tax-savvy ways to support your favorite causes because capital gains tax can be avoided.

Similarly, if you are a business owner, you can work with your financial advisors and our team to explore how you might give shares in the business to your fund at Brooklyn Org as a part of your overall estate plan. Not only will transfers be eligible for a charitable deduction during the year of transfer (and at fair market value if you held the shares for more than one year), but these gifts could also potentially reduce income tax burdens in the future if the business is sold.

4. Qualified Charitable Distributions from IRAs

As always, keep in mind that the Qualified Charitable Distribution (“QCD”) is a very smart way to support charitable causes. If you are over the age of 70 ½, you can direct up to $100,000 from your IRA to certain charities, including a field-of-interest, designated, unrestricted, or scholarship fund at Brooklyn Org. If you’re subject to the rules for Required Minimum Distributions (RMDs), QCDs count toward those RMDs. That means you avoid income tax on the funds distributed to charity. Our team can work with you to go over the rules for QCDs and evaluate whether the QCD is a good fit for you.

5. Don’t miss year-end deadlines

You can find all the details about our year-end DAF deadlines here. If you are setting up a new fund, we recommend you reach out to us as soon as possible.

However, if you find yourself at the end of December realizing you need to set up a fund at the 11th hour – or if you need to send additional money to your existing fund with us – please note that to be legally completed during this tax year checks must be postmarked no later than December 31.

Gifts of marketable securities also need to be fully transferred by December 31, so please work with your advisors to contact us with plenty of time for our team to process and receive the transfer.