Did You Leave Money on the Table this Tax Season?

Now that you've filed, are you eager to put all thoughts of taxes behind you? Not so fast! Unless you were strategic about your charitable giving, there's a good chance you left money on the table this tax season. Not to worry, though—we're here with some pointers to make sure 2025 will be different. Read on for some basics about how giving impacts your taxes, and some strategies to consider for maximizing your tax benefits through giving. Plus, I'll leave you with some helpful reminders so that by this time next year, you'll know you gave back to the community while reaping some financial benefits for yourself.

Giving Can Give Back to You 
How to reduce your taxes with charitable giving

By making charitable gifts, you can potentially lower your taxable income. Many people take the standard deduction when filing their taxes. However, when charitable donations, combined with other qualifying expenses—such as mortgage interest, property taxes, and medical expenses—exceed the standard deduction, it may be to your advantage to itemize those deductions. Doing so could reduce your taxable income by a larger amount, minimizing your tax burden.

How do you know whether you should take the standard deduction or itemize? Keep a good record of your charitable giving—don't lose those receipts and acknowledgement letters!—so that you can easily do the math to see whether you can deduct more from your taxable income by taking the standard deduction or by itemizing.

When looking at these deductions, be aware of the limits, which are based on the type of donation you make (more below on non-cash donations!) and the organization to which you give it. For example, you can deduct a higher percentage of your adjusted gross income if you give to a public charity or your church than to a private foundation.

Get Tax-Smart With Your Giving
Tax planning strategies for charitable donations

So, you know that charitable giving can potentially reduce your taxable income. How you do it can make a difference, too! One of the most tax-smart things you can do is consult a tax and financial planning professional in order to get strategic with your giving.

Something you might learn about it is the power of donating non-cash assets. It’s estimated that more than 90% of wealth in the United States is held in non-cash assets. And we’re not just talking about yachts and private jets of the rich and famous. These are assets that many of us already have—stocks, an IRA, cryptocurrency, life insurance, and maybe even a piece of land or property that you no longer use (but it costs you time and money)—and giving through these assets can open up even greater tax advantages.

Appreciated non-cash assets—such as publicly traded securities, real estate, or private business interests—held more than one year provide a unique opportunity to leverage your most valuable investments to potentially achieve maximum impact with your charitable giving. Donating these assets can unlock additional funds for charity in two ways.

First, you potentially eliminate the capital gains tax you would incur if you sold the assets yourself and donated the proceeds, which may increase the amount available for charity by up to 20%. Second, you may claim a fair market value charitable deduction for the tax year in which the gift is made and may choose to pass on that savings in the form of more giving.

- DAFgiving360

Your Individual Retirement Account (IRA) is another a tax-smart way to give, through making a qualified charitable distribution (QCD). While a QCD doesn’t qualify for a charitable deduction, a direct transfer to a charity doesn’t generate taxable income and can be used to satisfy all or part of your required minimum distribution. You benefit from this alternative way to donate even if you don’t itemize your deductions.

Another strategy to consider? Bundling. If you make charitable gifts each year, but they leave you below the standard deduction limit, you might think about giving a larger gift in one year—rather than giving smaller amounts across multiple years—to make it possible to itemize this year, and take the standard deduction in future years.

Have a donor-advised fund? Fantastic—you're already getting great tax benefits! Just be sure to give through your fund for maximum impact on the causes close to your heart.

Be Ready for Next Year
Maximize your 2025 tax benefits through charitable giving 

So, did you leave money on the table when doing your 2024 tax filing? Let's make sure you're feeling great next April by remembering the following:

• Keep good records! Don't forget to hang on to those receipts and acknowledgement letters when you make charitable gifts!
• Know your standard deduction limits!
• Consider tax-smart strategies for giving, like non-cash assets, bundling, and others!
• Consult a tax and financial planning pro to discuss how charitable giving fits into your unique circumstances, and how you can give with impact while enjoying the benefits.

The bottom line is that when you give, you make an incredible impact on the community. At Habitat, I've seen firsthand how the generosity of our donors is magnified in the transformative change that happens as a result—whether that's a new homeowner unlocking her front door for the first time, or an older adult knowing that his home is secure for the next generation. I hope that with these tips, you'll see just a bit of that benefit come back to you, too.  

If you'd like to talk about curating a giving plan that works for the community and for you, please reach out to me at (408) 273-7196 or LAmor@HabitatEBSV.org.