As attorneys, accountants, and financial advisors, you know you have clients’ attention when tax season rolls around. This makes it a great time to cover tax planning strategies for the current year and beyond. To help incorporate charitable giving topics into your tax season client conversations, we’ve put together tips to address three scenarios where the NoCo Foundation can assist your efforts.
Evaluate QCDs sooner rather than later.
If: Your client missed the 2024 deadline for a Qualified Charitable Distribution.
Then: Make sure the client took an RMD for 2024 (if required to do so). Start planning now for 2025 QCDs, paying close attention to the required process. QCDs are an excellent tool for clients who’ve reached the age of 70 ½ to give to a designated, field-of-interest, or unrestricted fund (donor advised funds are not eligible), but if the client waits until the last minute at year-end, there might not be time for the transaction to be completed by December 31 as required. In addition, QCDs executed early in the year can help avoid the negative effects of the “first-dollars-out rule” so that the QCD can count toward your client’s 2025 RMD.
Watch for charitable giving opportunities in business succession planning.
If: Your client is beginning to consider exit strategies for a closely-held business.
Then: Reach out to the NoCo Foundation right away. Gifts of closely-held stock to a charitable fund can be a useful component of a business succession plan. That’s because a client can gift shares of the business, which in turn means that no capital gains tax will apply to the gifted portion when the business eventually sells. The proceeds of the gifted shares flow into a fund to support the client’s charitable priorities. Keep in mind that timing is crucial; if a deal is in process at the time the shares are transferred to the charitable fund, the charitable deduction is in jeopardy.
Consider gifts of appreciated stock early in the year.
If: Your client’s stock portfolio made big gains last year.
Then: Evaluate whether it might be wise to make gifts of appreciated stock to a nonprofit—or fund at the NoCo Foundation— early in the year. If certain stock positions are high right now, it’s worth considering whether a gift in the near future could be strategic in maximizing charitable dollars. As a reminder, gifts of stock to a public charity are eligible for a charitable deduction in the amount of the stock’s fair market value at the time of transfer.
And, when the stock is sold so its proceeds can be deployed to further your client’s charitable goals, no capital gains tax will apply.
Our goal is to be your go-to sounding board for any client situation where charitable giving is an option. You’re encouraged to reach out anytime you and a client are discussing philanthropy. Whether we can help as a service provider or as a resource to point you in the right direction, the NoCo Foundation is honored to be your local partner in philanthropy.
