So Long, 2022! Celebrate With Tax Savings

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As you get ready to toast the new year, consider these smart ways to wrap up 2022 on a financial high note. Not only can you save on your taxes, but you can also make a huge impact at AU.

Contribute appreciated stock instead of cash.

Suppose you have owned a stock for more than one year and it has grown in value. In that case, you may be in line for two tax benefits: avoid taxes on the appreciated value and qualify for an income tax charitable deduction based on today’s market value when you itemize.

You will enjoy the same benefits with a gift of appreciated cryptocurrency.

You receive the same tax saving as if you wrote a check, but with the added benefit of eliminating capital gains taxes.

Timing: Complete all transfers by Dec. 31. This includes by mail, electronic transfer, or hand-delivery of the assets.

Sell depreciated assets and donate the cash.

Unfortunately, 2022 wasn’t suitable for all portfolios. If you would like to support AU, but your stocks or cryptocurrency have fallen in value, it is best to sell them first and then donate the cash. This avenue allows you to record the loss as a tax deduction and qualify for an income tax deduction for the gift.

Timing: Complete all transfers and cash donations by Dec. 31.

Open a donor-advised fund account.

Contribute to a donor advised fund and enjoy a tax savings on that amount when you itemize.

Timing: Complete the contribution by Dec. 31. You do not have to designate the funds this calendar year to receive the tax benefits.

Make a qualified charitable distribution of IRA assets.

If you are 70½ or over, you can give any amount up to $100,000 per year from your IRA directly to AU. You will not pay income taxes on the transfer. If you are required to take minimum distributions, you can use this transfer to satisfy all or part of your obligation.

Timing: We must receive your gift by Dec. 31 for your donation to qualify this year. If you have check-writing features on your IRA, please be aware that your check must clear your account by Dec. 31 to count toward your required minimum distribution for the calendar year.

Help offset the tax liability on a retirement account withdrawal.

If you are 59½ or over, you can take a distribution from your retirement plan account and then make a gift to AU without an early withdrawal penalty. If you itemize your deductions, you can take a charitable deduction for the amount.

Timing: If your gift is in the form of a check, it must be postmarked on or before Dec. 31 for your donation to qualify this year.

Make a tribute gift in honor of a loved one.

Any year-end donation can be made in a loved one’s name. This gift can be a heartfelt way to celebrate someone important in your life or to remember someone.

The Countdown Is On

As we approach the end of the year, we are happy to help ensure that you realize the greatest benefit for your hard-earned assets. Please contact Seth D. Speyer at 202-885-3411 or speyer@american.edu.

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