Charitable Contributions – How to Maximize Your Impact in 2022

Doug Pitassi

August 19, 2022

Charitable Contributions - How to Maximize Your Impact in 2022 - Doug Pitassi

If you’re considering making charitable contributions this year. You should know that there are some essential tax-planning considerations that you should make to maximize your impact. For example, you should consider the limitations on using long-term capital gains property for charitable purposes and the political organizations you may want to avoid. Additionally, you should know the strategies you can use to maximize the impact of your current assets. In this article, we’ll discuss the tax-planning considerations you should take, as well as some strategies you can implement to maximize the impact of your current assets.

Limitations on charitable contributions

The limits on charitable contributions in 2022 aren’t likely to change. There are many unknowns. The Biden administration is pushing the Build Back Better plan, but a slender Democratic majority in Congress could make significant changes difficult. The proposed changes will likely evolve with further debate and negotiation. Donors should review their current tax strategies and consult their CPAs and financial advisors. Charitable giving is a valuable tool to incorporate into an overall financial plan.

For those who itemize their taxes, 2021 tax year charitable contributions will qualify for a full deduction. In addition, donations made to charitable organizations are deductible up to 50% of AGI. If you aren’t itemizing, the limit is lower at twenty percent and thirty percent, respectively. A tax expert can use Tax Exempt Organization Search to find the eligible organizations for these deductions. In addition, you can use a status code to search for a nonprofit organization that meets your criteria.

Limitation on long-term capital gain property

The limits on long-term capital gains for charitable contributions have not changed since the law was enacted in 2006. However, the IRS recently added a new provision to the code to make donating stock in S corporations and specific real estate types more attractive. While the rules for long-term capital gains will remain the same as before. The percentage limit for donating property is reduced to 30% instead of 30%.

For the tax year 2022, the federal government has made changes to the law that make these changes permanent. In addition to making the tax laws more equitable, the limitation on the long-term capital gain property is now 20% instead of 50%. This means you can donate appreciated property to charity without recognizing any gain. However, the tax laws don’t require you to present the same amount yearly, so check with your tax advisor before donating.

Limitations on political organizations

The Alaska Public Offices Commission is considering amending regulations on political communications, contributions, and independent expenditures to reintroduce limits on contributions to political organizations. The Commission said the boundaries should be reinstated in its draft advisory opinion. The proposed rule would also allow donations to authorized committees for particular and emergency elections. Party conventions and caucuses would also be considered elections. The Commission hasn’t discussed how to divide in-kind donations between election seasons.

The limit for individual contributors to the Senate increased to $51,200 per election cycle. However, the new law only allows this increase in odd-numbered years. While the pre-election limits on contributions to candidates are in effect for a two-year cycle ending on the next general election date. All other contribution limits will remain the same until the next general election in 2022. As a result, these changes to charitable giving will not affect the rules for the next election cycle. However, it is essential to consult a financial advisor or CPA if you have any questions regarding the new tax law.

Strategies to maximize impact with current assets

For many individuals and families, the tax bill that came with their recent generous gifts was far higher than expected. This could be a great reason to consult with an advisor who will help them maximize their charitable contributions while minimizing their tax exposure. Here are some strategies to maximize your charitable impact in 2022. Read on to learn more about these strategies and how to start or continue a generous giving plan.

The most important thing about charitable giving is that the number of giving vehicles is rising. Many individuals are looking for more innovative ways to give back. Many individuals and businesses also recognize the tax advantages of giving while taking advantage of favorable market conditions. Investing in mutual funds is a popular first step in passing, and the fastest growing charitable vehicle is the donor-advised fund (DAF). The National Philanthropic Trust’s 2021 DAF report reveals one million donor-advised funds.