I am constantly looking for ways to help save our clients tax. Today we will review gifting strategies.
Whether you’re gifting to loved ones or donating to charities, the right strategy can help you reduce taxable income, lower estate taxes, and optimize deductions. Below are some key tax-efficient giving strategies:
Annual Gifting: Lower Estate Taxes While Transferring Wealth
- You can give up to $19,000 per recipient (2025) without triggering gift tax filing requirements. This goes up to $38,000 for married couples.
- Consider tax-smart gifting methods, such as Roth IRA contributions for family members, 529 Plan funding for education, and direct payments for tuition or medical expenses (which do not count against your annual $19k exclusion).
- For larger amounts, there are estate/trust strategies available to reduce or eliminate estate taxes
Donating Appreciated Securities: Maximize Deductions, Avoid Capital Gains
- Instead of donating cash, contribute stocks, ETFs, or mutual funds with long-term gains.
- You receive a charitable deduction for the full fair market value, and avoid paying capital gains tax on appreciation.
Donor-Advised Funds (DAFs): Immediate Tax Deduction, Future Giving Flexibility
- Contribute to a DAF to receive an immediate charitable tax deduction, even if funds are distributed later.
- They can be used to take the deduction now but distribute the funds to charity in future years. This ensures that you meet the standard deduction limit for the year.
Charitable Trusts: Strategic Planning for Taxes & Legacy Goals
- Charitable Remainder Trusts (CRTs): Convert highly appreciated assets into an income stream while deferring capital gains tax and receiving an upfront charitable deduction.
- Charitable Lead Trusts (CLTs): Transfer wealth to beneficiaries at a reduced gift/estate tax cost while supporting charities in the interim.
Qualified Charitable Distributions (QCDs): Tax-Free IRA Donations for Those 70½+
- Individuals over 70½ can donate up to $108,000 (2024) directly from an IRA to a qualified charity.
- QCDs count toward Required Minimum Distributions (RMDs) but are excluded from taxable income, reducing adjusted gross income (AGI) and potentially lowering Medicare premiums.
Optimize Your Tax Strategy
In our industry, we call this time of year “planning season” since we still have sufficient time to discuss long-term planning and implement it in detail before year end.
If you have questions or are ready for structure & implementation, reach out this week.
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George Dimov CPA
info@dimovtax.com
(833) 829-1120 toll free
