As the 2022 year comes to an end, donors should consider how they can efficiently maximize their charitable donations for income tax purposes.  EricsHouse is a qualifying 501(c)(3) charity to which donations qualify for a charitable deduction.  However, claiming charitable deductions has become harder as only those donors who plan to itemize their deductions for the 2022 tax year may deduct their charitable contributions.  This is different from the 2021 tax year, in which Congress temporarily allowed donors electing the standard deduction to deduct up to $300 of their charitable donations ($600 for couples).  Moreover, as the standard deduction continues to increase, now currently at $12,950 for single donors ($25,900 for couples),  donors may be more likely to elect the standard deduction over itemizing.

Nevertheless, donors electing to itemize may still be able to continue their giving spirit while receiving a tax benefit.  Currently, the IRS allows donors to deduct donations up to 50% of their Adjusted Gross Income.  This limit varies depending on the donation type.  Additionally, donors who have held highly appreciated non-cash assets for more than a year, such as stocks, bonds, mutual funds, or real estate, have the opportunity to reduce income tax liability to a greater extent.  By donating these long-term assets directly rather than selling the asset and later donating the cash, donors can deduct the full value of the asset while also eliminating any capital gains he or she would have realized in selling the asset.

Thus, during this holiday season, EricsHouse donors should ensure they are giving generously and saving generously.

Contributed by:

Eric A. Ess

Partner   HUSCH BLACKWELL LLP