How will year-end affect your tax and donation strategies?
As the calendar turns to fall, we often begin thinking about the goals we set earlier in the year, the coming giving season or end-of-year tax or financial-planning strategies.
Whether charitable giving is part of your holiday giving plans or a way to maximize your philanthropic donations with efficient tax-planning strategy, there’s no better time than now to review your plans with your financial planning professional.
“It’s really important when we’re speaking with clients that we’re having these fulsome conversations that involve goals for charitable giving,” says Tyler MacLean, a Financial Planner with Gulf & Fraser and Credential Securities, and member of the Langley Memorial Hospital Foundation board since 2018.
“Any time you’re reviewing your investments with your advisor, you should be highlighting what’s important for you and that includes philanthropy.”
While the past year has been challenging for some families, it’s been difficult for charities as well, MacLean notes.
One benefit of working with your financial planner is finding the most efficient way to give to the causes that matter most to you. Sometimes that’s smaller, regular donations through the year, other times it’s finding more creative solutions, like gifts of securities. “If you have time to sit down and plan for it, I think you should work with your advisor to see what makes the most sense for your situation and your goals.”
Thinking beyond cash: Consider donating stocks
As investors review their quarterly investment statement coming Sept. 30 for example, it’s a great time to meet with your planner to review strategy and determine if any stocks have appreciated enough that it could be considered for a gift of stock.
How does it work? If a donor was already planning to make a year-end gift to charity using cash, sometimes transferring stock can bring greater tax savings, presenting the opportunity to give more.
For example, if an investment has increased in value, you’ll need to pay capital gains taxes when selling it. Sometimes transferring those stocks to a charity like the Hospital Foundation can bring greater tax savings than by donating cash, eliminating the capital gains and leaving no taxes owing, MacLean explains.
Whether charitable giving is part of your holiday giving plans or a way to maximize your philanthropic donations with efficient tax-planning strategy, there’s no better time to review your plans with your financial planning professional.
Planning for today, and tomorrow
Another benefit of charitable donations – and planning ahead – is that you can claim your donation in the current tax year, or carry it forward for up to five years, MacLean notes.
That can be important if you know you’ll have a high-tax year coming up, maybe due to the sale of a summer residence or business, for example. Carrying forward this year’s donation credit can help offset those taxes down the road.
Other possible solutions include establishing a donor-directed investment fund that lets you support causes that matter from permanent, income-earning funds.
As we approach the end of the year, now is the ideal time to make changes that can benefit you, your loved ones and the charities you care about.
Join the Foundation’s next free Professional Advisor-Hosted seminar, Nov. 7. For more details about the seminar or working with the Langley Memorial Hospital Foundation, visit lmhfoundation.com/news or call
Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities. The views expressed are those of the author and not necessarily those of Credential Qtrade Securities Inc.