7 Tax-Smart Charitable Giving Strategies Every San Diegan Should Know

At Fee Only Planners, we’re proud to serve as a trusted fiduciary financial advisor to families and individuals throughout San Diego. With the end of the year approaching, many of our clients are asking how they can make a bigger impact with their charitable giving and keep their tax bills in check. If you’re searching for ways to give back while optimizing your finances, this guide is for you.

Whether you’re already connected with the San Diego Foundation or looking for guidance from a financial advisor in San Diego CA, these strategies can help you make informed, intentional decisions. And of course, if you want to talk through your options, just give us a call or drop us a note — we’re happy to help.

Why Your Year-End Giving Strategy Matters

San Diego’s nonprofit sector plays a vital role in lifting up communities, and it depends on thoughtful donors like you. According to recent data, giving across the U.S. dropped in 2022, but the need here at home continues to rise. In fact, grants in San Diego topped $130 million last year, thanks in part to locals who planned ahead.

Let’s walk through seven ways to make the most of your donations this year — especially if you’re working with a San Diego financial planner who can help align your giving with your long-term goals.

1. Give Cash for an Immediate Tax Deduction

If you’re looking for a straightforward way to support the causes you love, cash donations still reign supreme. You can deduct up to 60% of your adjusted gross income (AGI) when you itemize. And if you give more than that? You can roll the deduction forward for up to five years. Whether you’re donating to your church, favorite local nonprofit, or a donor-advised fund (DAF) with the San Diego Foundation, this is a powerful first step.

2. Donate Appreciated Securities

Got stock that’s grown in value? Skip the capital gains tax and give it away instead. Gifting appreciated securities (like publicly traded stock or mutual funds) lets you:

• Deduct the full fair market value (up to 30% of your AGI)

• Avoid paying tax on the gains

• Make a larger gift with the same asset

Your fiduciary financial advisor can help you determine the best assets to give and the timing to maximize the benefit.

3. Include a Planned Gift in Your Estate Plan

Looking to leave a lasting legacy? Planned gifts are a meaningful way to direct wealth toward the issues that matter most to you. From naming a nonprofit in your will to setting up a charitable remainder trust, legacy giving is a natural conversation to have with your estate attorney and your financial advisor in San Diego CA.

4. Bunch Your Donations to Maximize Deductions

Thanks to the increased standard deduction, fewer taxpayers are itemizing. But if you “bunch” two years of donations into one, you might clear the threshold to write off more. For example:

• Donate $12,000 this year

• Skip next year

• Itemize this year, take the standard deduction next year

This can be a smart move if you’re committed to charitable giving but also want to be efficient.

5. Use Qualified Charitable Distributions (QCDs) from Your IRA

If you’re over age 73 and taking Required Minimum Distributions (RMDs), consider using a QCD to give directly from your IRA. Benefits include:

• Avoiding ordinary income tax on the distribution

• Supporting a qualified charity of your choice

• Reducing your AGI, which may improve tax efficiency in other areas (like Medicare premiums)

Keep in mind: QCDs can’t go to donor-advised funds, but they can go directly to charitable initiatives like those at the San Diego Foundation.

6. Combine Tax-Loss Harvesting with a Cash Gift

Have some investments that didn’t perform as planned? Sell them at a loss, capture the tax benefit (offsetting gains or up to $3,000 of ordinary income), then donate the cash proceeds. This strategy lets you reduce your tax bill and still make an impactful donation. Ask your San Diego financial planner how this strategy fits into your overall portfolio plan.

7. Donate Complex Assets (Not Just Stocks and Cash)

Did you know you can donate real estate, business interests, or even private company stock? Complex asset donations can:

• Unlock significant charitable deductions

• Help you avoid taxes on asset sales

• Support your favorite causes in a big way

While not all organizations can accept complex assets, groups like the San Diego Foundation specialize in handling these gifts. If you’re unsure where to begin, reach out to us at Fee Only Planners — we’ll walk you through it.

Timing Is Everything

To make sure your charitable gifts count for this tax year, be mindful of cutoffs:

• Grants from your donor-advised fund should be made by December 21 at 12:00 p.m.

• Contributions of stock or complex assets often need to be initiated by mid-November to allow for processing

Let your fiduciary financial advisor help coordinate deadlines with your accountant and fund provider.

Let’s Make This Giving Season Count

You want your money to go farther. You want your giving to mean more. And you want your financial plan to work harder for you and the people and causes you love.

That’s exactly what we do at Fee Only Planners.

Whether you’re donating to a nonprofit through grants in San Diego, exploring legacy gifts through the San Diego Foundation, or simply trying to find a fiduciary financial advisor you can trust, we’re here for you.

Let’s have a brief intro to see how we can help. Call us at (858) 547-1845 or reach out online.e can protect you from costly mistakes and enhance your financial well-being for the future. Get the best financial planning assistance with Merrithew & Thorsten, Inc. in San Diego.*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Fee Only Planners to provide information on a topic that may be of interest. Copyright 2024 Fee Only Planners.