2022 Tax Environment
It is unlikely that any U.S. tax law changes will materially impact the current rules around charitable giving for the 2022 tax year. Considering the time required to pass and implement tax law changes, any legislation that may be passed in 2022 likely would not be implemented until 2023.
A key factor for determining the tax benefits of a charitable gift is the annual standard deduction amount, which has more than doubled since passage of the Tax Cuts and Jobs Act in December of 2017. For 2022 taxes, single filers may claim a $12,950 standard deduction, while married couples filing jointly can claim a $25,900 standard deduction. This is an increase of $400 for single filers and $800 for married couples, compared to 2021 amounts.
Because of these increases in the standard deduction amount, some taxpayers who historically itemized deductions—including charitable contributions—may find that the total amount of their itemized deductions does not exceed the standard deduction.
However, charitably inclined individuals and families can still maximize their tax benefits through strategies utilizing both itemized and standard deductions through key charitable giving incentives in existing tax laws.
With this basic framework in mind, let’s review a three tax-smart tips for giving to Mountain Family Health Centers in 2022.
Tax-Smart Giving Strategies
Contribute appreciated non-cash assets (like stocks) instead of cash
One of the most effective tax-smart strategies for achieving maximum charitable impact is donating appreciated non-cash assets held more than one year. Donors who use this strategy can generally eliminate the capital gains tax they would otherwise incur if they sold the assets first and then donated the proceeds.
Eliminating the capital gains tax—15% or 20%, depending on your income level—can increase the amount available for Mountain Family by up to 20%.
Contact Jan Jennings, Director of Development, at email@example.com or at (617) 595-8500 for more information. As always, consult your tax or financial advisor before making a gift.
Bunch Two Years of Contributions into 2022
Some donors may find that the total of their itemized deductions for 2022 will be slightly below the level of the standard deduction. In that circumstance, it could be beneficial to combine or “bunch” 2022 and 2023 charitable contributions into one year (2022), itemize deductions on their 2022 tax returns, and take the standard deduction on 2023 taxes.
In addition to achieving a large charitable impact in 2022, this strategy could produce a larger two-year deduction than two separate years of itemized deductions, depending on income level, tax filing status, and giving amounts each year.
Make an Individual Retirement Account “IRA” Charitable Rollover Gift
If you are over 70 ½, an easy and convenient way to help Mountain Family is to make a tax-free rollover gift from your IRA. Gifts of up to $100,000 will be excluded from your gross income and will count towards your required minimum distribution (RMD). This gift is also called a Qualified Charitable Distribution Gift (“QCD”). For more information, please review QCDs.
You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
Since the gift does not count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.
Your gift must go directly from your IRA to Mountain Family. Please contact Jan Jennings, Director of Development, for more information, at firstname.lastname@example.org or at (617) 595-8500.
For more information on how potential tax reform measures could impact your giving, please visit: https://www.fidelitycharitable.org/articles/how-potential-tax-reform-could-affect-your-charitable-giving.html.
As a 501(c) (3) tax-exempt non-profit organization, gifts to Mountain Family Health Centers are tax-deductible to the extent provided by law. Please consult your own tax or financial advisor before making a gift, as Mountain Family cannot provide tax or legal advice.