Year-End Tax Planning Strategies for Individuals – Part I

With the end of 2022 coming closer and closer every day, you can help reduce your taxable income during the last month of the year with tax planning strategies. We will be posting a series of ideas to consider in order to minimize your tax liability. See the “Related Posts” link at the bottom of this article for more tax planning strategies.

Contributions to Charitable Organizations

Many individuals participate in charitable giving during this festive season. By contributing to nonprofit organizations, not only can you participate in the true spirit of the holidays, but you can also potentially reduce your taxable income. However, you should be aware of some changes to the tax treatment of charitable contributions for 2022. Unlike in 2021, you cannot take charitable tax deductions in 2022 without itemizing. In 2022, an individual taxpayer can donate up to 60% of adjusted gross income (AGI) for cash contributions and 30% of AGI for non-cash contributions (e.g., donating shares of stock). If the charitable contributions exceed these AGI limits, the excess can be carried forward until it is utilized, or up to five years.

Another tax planning strategy involves donating stock that has appreciated for more than one year to a charitable organization. Your individual tax deduction is based on the current value of the shares, not the original purchase amount. This donation will also eliminate your obligation to pay capital gains taxes on the asset, as would be required if the stocks were sold. Another post in this series discusses tax planning strategy related to securities.

Finally, in addition to making cash or non-cash contributions during this season of giving, you can also realize tax benefits by making charitable contributions from your retirement accounts. Individuals older than 70½ years can make a qualified charitable distribution (QCD) from a traditional Individual Retirement Account (IRA).  Eligible individuals can donate a total of $100,000 to one or more charities by transferring the amounts directly from an IRA to the charitable organization. These contributions are made in lieu of taking required minimum distributions (RMD). The SECURE Act increased the age at which RMDs must be taken from 70½ to 72, however, the qualified charitable distribution age of 70½ wasn’t impacted by this change. Click here to read about other key aspects of the SECURE Act.

As always, our tax professionals are available to help you address your specific situation – please reach out to your GYF executive or contact our office at 412-338-9300 for assistance.

Related Posts

­­Year-End Tax Planning Strategies for Individuals – Part II (Bunching of Itemized Deductions)

­­Year-End Tax Planning Strategies for Individuals – Part III (Pre-tax and Self-employed Deductions)

­­Year-End Tax Planning Strategies for Individuals – Part IV (Securities)

Dylan Kantz

Dylan Kantz

Dylan joined the GYF Tax Group in 2022, following his graduation from Saint Vincent College. He provides tax compliance and planning services to individuals and businesses.

[bws_pdfprint display=’pdf,print’]

Recent Posts

Subscribe to RSS

Get RSS feed notifications when updates are posted on the GYF Insights blog

Contact us to find out more

By submitting this form, you agree to the terms for our collection and use of your data as set forth in our privacy policy