Ways to Maximize Your Giving Impact

The holidays are a time for giving. In addition to the warm fuzzy feeling we get from donating to our favorite charities this time of year, these last few weeks of December are our last chance to reduce what we’ll owe Uncle Sam come April.

Here are some strategies to maximize your giving power while potentially minimizing your tax liability.

Donate Appreciated Investments

With the S&P 500 roughly doubling between 2016 and 2021, many investors have appreciated non-cash assets — such as stocks, mutual funds, and real estate in their portfolios. Gifting these assets — if you’ve held them for more than one year — can provide an opportunity to leverage one’s charitable giving.

First, you can potentially eliminate the capital gains tax you would incur if you sold the assets yourself and donated the proceeds. Second, you may claim a fair market value charitable deduction for the tax year in which the gift is made. For example, you could by a pianting for $20,000, have it appraised in a few years for $75,000, then donate it to claim a $75,000 deduction.

Charitable Stacking

Many people who donate to charity take the standard deduction when filing their tax returns, because they do not have enough to itemize their deductions. This means they do not receive any tax savings for their charitable donations.

But you can benefit from consolidating two years’ worth of giving into one. 

For instance, let’s say you decide to stack, or combine, your 2021 and 2022 charitable contributions into one year (2021). You would then itemize deductions on your 2021 tax return and take the standard deduction in 2022.

great way to increase your itemized deductions is to prepay contributions into a donor-advised fund (DAF) — an investment account administered by a qualified non-profit used solely for charitable giving.

Donors receive an immediate tax deduction for each year they contribute cash, appreciated assets, or investments to their DAF.

However, with Charitable Stacking, the special CARES Act deduction ($300 for single filers and $600 for married couples) for cash donations made to qualifying organizations in 2021 won’t apply.

Donating Retirement Assets

If you’re in or near retirement, you can also consider using Qualified Charitable Distributions (QCDs) to manage your required minimum distributions from an IRA.

QCDs allow individuals who are 70½ years old or older to donate up to $100,000 total to one or more charities directly from a taxable IRA — instead of taking their required minimum distributions.

Soon to be retirees can covert a retirement account to a Roth IRA and they’re quite popular. That’s because, unlike a traditional IRA, Roth IRAs have no required minimum distribution (RMD) rules and allow you to withdraw earnings tax-free in retirement.

But, converting a traditional to a Roth IRA is considered a taxable event — meaning you must pay taxes on the amount you’re transferring.

Fortunately, you can offset some of that taxable income while fulfilling your philanthropic goals.

If you’re planning to make donations in future years, consider condensing your contributions into a larger-than-usual gift the same year you complete your IRA conversion.

The greater the donation, the more you can itemize and deduct, giving you a substantial tax break when you need it most.

Even as the economy and people’s financial situations recover from the effects of the pandemic, the need for charitable giving will always remain.

Hilltop Wealth Advisors can help you determine the best strategies to amplify your generosity.


The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth Solutions cannot guarantee the accuracy of all such information presented.

Website Disclosures

Hilltop Wealth Solutions (“Company”) is an SEC registered investment adviser located in Mishawaka, IN with branch office located in MI and other locations throughout IN.  The Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.  The Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.  Accordingly, the publication of the Company’s web site on the Internet should not be construed by any consumer and/or prospective client as the Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by the Company with a prospective client shall be conducted by a representative that is either registered or qualified for an exemption or exclusion from registration in the state where the prospective client resides.  For information pertaining to the registration status of the Company, please contact the SEC or the state securities regulators for those states in which the Company maintains a notice filing.  A copy of the Company’s current written disclosure statement discussing Company business operations, services, and fees is available by going online via the SEC’s Investment Advisers Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC #801-115255.

The Company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to the Company web site or incorporated herein and takes no responsibility, therefore.  All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by the Company, will be profitable or equal any historical performance level(s).

Certain portions of Company web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, the Company (and those of other investment and noninvestment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from the Company, or from any other investment professional.

The Company is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice.

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if the Company is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of the Company by any of its clients.  Rankings published by magazines and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.  Rankings are generally limited to participating advisers.

To the extent that any client or prospective client utilizes any economic calculator or similar interactive device contained within or linked to the Company web site, the client and/or prospective client acknowledges and understands that the information resulting from the use of any such calculator/device, is not, and should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from the Company, or from any other investment professional.

Each client and prospective client agrees, as a condition precedent to his/her/its access to the Company web site, to release and hold harmless the Company, its officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from the Company.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.