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Tax-wise Giving

Your gifts to Osprey Wilds help us connect people of all ages and communities with nature and strengthen their commitment to its care. That is why you give. You might also want to consider how, when, and what you give. Following are some ways to make your generosity more fruitful, both for the causes you care about and for you and your family.

Charitable Deductions

If you are among the 90 percent of American taxpayers who take the standard deduction and you live in Minnesota, you can still take a deduction for charitable contributions on your state return. Minnesota taxpayers who do not itemize deductions on their federal income tax return can take a deduction for 50% of total charitable contributions over $500. 

In 2020 and 2021, COVID-relief legislation provided “above-the-line” deductions that non-itemizers could take for charitable giving up to $300 ($600 for a couple filing jointly in 2021). That was not extended in 2022…but hold on to those charitable giving receipts in 2023! The Charitable Act, currently making its way through Congress, could reinstitute the charitable deduction that was available in 2020 and 2021, but with substantially higher limits. The bill, if passed, would allow taxpayers to take a deduction for charitable gifts up to a third of the standard deduction amount, which for 2023 is $13,850 for a single filer, $27,700 if filing jointly. 

Another way to take advantage of a tax deduction is to “bunch” your giving—combining two or three years of charitable giving into a single year so you can surpass the itemization threshold. One way to implement that strategy is to create a donor-advised fund (DAF), a dedicated account for charitable giving. You can claim a tax deduction in the year you contribute to your DAF, then recommend grants over time to any IRS-qualified charity, while the funds grow tax-free.

Giving from Investment Accounts

If you’re over 70 ½, a qualified charitable contribution (QCD) from an IRA could be the most cost-effective way for you to give. Once you reach 70½, you and your spouse can each arrange for transfers directly from your IRA to a qualified charity such as Osprey Wilds, without paying income tax on the withdrawal. Transfers can be as much as $100,000, and inflation indexing will begin taking effect in 2024.  This gift option provides tax savings to donors even if they do not itemize deductions. Instead of taking a charitable income tax deduction for the gift, you can exclude the distribution from your income.

Since 2006, IRA owners 70½ or older have been able to make QCDs offsetting their Required Minimum Distributions (RMDs). For 2023 Congress changed to 73 the age at which RMDs must begin, but beginning at age 70½, IRA owners can begin giving tax-free dollars while reducing future RMD amounts and the tax liability that will come at 73.

The QCD has also been expanded to allow planned gifts. Individuals may make a one-time transfer of up to $50,000, couples up to $100,000, to fund a charitable trust or charitable gift annuity. 

Donating appreciated stock or other assets remains a cost-effective giving option. If you donate long-term appreciated assets—including stocks, bonds, mutual fund shares, or real estate to Osprey Wilds (or via a donor-advised fund)— you generally won’t have to pay capital gains, and you can take an income tax deduction for the full fair-market value, up to 30 percent of your adjusted gross income. You can carry forward any unclaimed amount for a deduction for up to five years.

Planned and Estate Gifts

More than 98 percent of estates fall below the exemption line—the federal estate tax exemption for 2023 is $12.9 million; the Minnesota exemption is $3.0 million. But if you intend to include your favorite causes in your planned giving, tax considerations can be important, regardless of the size of your estate. 

While very few people are subject to estate and gift taxes, we all continue to be subject to income tax. Many people who don’t benefit from a charitable estate-tax deduction might benefit from income-tax planning. For instance, tools such as charitable gift annuities and trusts can provide an immediate tax deduction, an income stream for you or your heirs, and a meaningful legacy gift for the causes you support.

When including charities among your beneficiaries in a will or trust, tax-wise allocation of assets can make a difference. For example, if left to family or other loved ones, assets in a tax-deferred retirement account are subject to income and possibly estate tax when distributed. However, if left to charity, these assets will pass tax-free. So leaving an IRA to charity and appreciated securities to individuals might allow your heirs to inherit more.

These are just a couple of ways that tax-advantaged planned giving can maximize your charitable impact. It’s a good idea to consult with your financial or legal advisors to explore what could work best for you based on your specific circumstances. In addition, Osprey Wilds’ partnership with the St. Paul and Minnesota Foundation makes confidential, no-obligation planned giving expertise available to you at no cost. 

For more information, contact Development Director Jim DeYoung, 320-245-7791 or deyoung@ospreywilds.org.

Information provided here is general and educational in nature and is not intended as legal or tax advice. Please consult with a professional advisor when considering these types of gifts.

Updated: 7/13/2023