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5 tips for holiday gifting and donations

As the holiday season approaches, so does the time of gift giving. While many of us like to receive gifts, science shows that giving gifts makes us happier. Here are 5 tips to help you with your gift giving this year: 

  • Make a Plan: It’s not uncommon to have many causes (and family members) that you want to support, but it’s important to make a budget for your end-of-year giving and stick to it. You don’t want your gift giving to have a negative impact on your long-term financial plan.  A spending plan is one of the most important factors to financial success. 
  • Do Your Research: As you narrow down your list of charities or causes that you would like to donate to, make sure to do your research. At a minimum, confirm that the organization is considered a tax-exempt 501(c)(3) public charity, which can be done using the IRS database of qualified charitable organizations. To do this you will need the company's Employer Identification Number (EIN). Guide Star is a helpful website that you can use to find a charity's EIN. There is a free and a premium version depending on how many organizations you need to look up. 
  • Consider Taxes: Before making your donations for the year, consider the tax impact. For charities you donate to regularly there may be an opportunity to lump multiple years worth of gifts into one year. This may allow you to itemize on your tax return and save you money. If you have a stock or mutual fund with large gains in your taxable account, consider gifting some of that highly appreciated security directly to the charity. This allows you to potentially eliminate capital gains tax (up to 20%) that you would incur if you sold the stock first and then gave the money. Making a stock donation is easy to do. You can generally find instructions on the organization's website that you can give directly to your custodian or financial advisor for help. 
  • Gifts to Children and Grandchildren: There are many strategies for gifting money to children or grandchildren. We recommend using a 529 Plan for college savings, as it has great tax benefits and ensures the funds are used for college expenses only. If you don’t have a specific goal in mind or want the recipient to have more flexibility with how the funds are used, we suggest looking into a Uniform Transfer to Minors Account (UTMA)*. This allows you or another qualified family member to have control of an investment account until the minor is 21. It’s important to note that you can only gift up to $15,000 per person before needing to file a gift tax form, which could impact your taxes.  
  • Giving your Time: Monetary gifts are not the only way to support your causes. Many charities need volunteers, especially during the holidays! Consider giving your time so you get a chance to see firsthand how your gift impacts others. 

If you’re not sure how to meet your charitable giving goals this year, a fiduciary advisor can help you with the final details. They have the experience and expertise to address any questions you might have. More importantly, they’re legally obligated to act in clients’ best interests, so you can rest easy knowing that your financial goals are in good hands.

Wishing you a Happy Thanksgiving for the whole team at Wealth Legacy Insititute!

*depending upon your state, a Uniform Minors Gift Account (UGMA) may be an additional option. You should review both options and do your own research before deciding which account to fund.

Learn what to look for in a financial advisor to make sure yours is a fiduciary.  Download our educational guide.

Denver Fiduciary Guide

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