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Charity, donor-advised funds, volunteering, gifts to family, and the gift tax. Give more to the causes and people you choose and less to taxes.
A donation in someone’s name makes a fitting gift for a person who has everything or cares deeply about a cause, as long as it goes to a charity they already support. Use the charity’s option to give in their honor, add a note in your own words, and keep the receipt, since the tax deduction is yours.
When you can’t afford a present, give your time instead, matched to something the person needs, such as a night of babysitting, a home-cooked dinner, or a chore they keep putting off. Write it on a coupon with exactly what you’ll do and by when, and book the first session as you hand it over.
Before you buy something because part of the price goes to charity, find out how much the charity gets per purchase. When the share is small, buy only what you’d buy anyway and give to the charity directly. A $10 gift sends 10 times as much as a $40 purchase that donates $1.
In a big family, buying a gift for every adult adds up fast. Propose a name draw before Thanksgiving instead, where each person draws one name and buys that person a gift under a price cap you all agree on. Everyone gives and gets one gift instead of a stack, and that one can be better.
To give stock, transfer the shares to the recipient’s brokerage account or a child’s custodial account. Your cost basis, what you paid, goes with them, so the recipient owes tax on your gain when they sell. Give appreciated shares to someone whose low income means 0% tax on long-term gains, and sell losing shares yourself to deduct the loss.
When a charity you don’t know asks for money after a disaster, spend five minutes checking its ratings and complaint record before you give. If it asks you to pay by gift card, wire, crypto, or a payment app, walk away. If it checks out, donate through its own website, not the link or caller that reached you.
If your mortgage interest, property taxes, and charitable gifts land just under the standard deduction, most of that spending doesn’t cut your tax. Bunch two years of gifts and other flexible deductions into one year and itemize, then take the standard deduction the next. Run the numbers both ways first. The bigger your gifts, the more bunching adds.
A donor-advised fund lets you donate stock you’ve held more than a year, skip the capital gains tax on its rise, and, if you itemize, deduct its full market value now. The money stays invested while you pick charities over time. If you give every year and own winners like that, open one before your next donation.
Starting January 1, 2027, giving to a qualified Scholarship Granting Organization earns you a dollar-for-dollar federal tax credit of up to $1,700, or $3,400 for a married couple filing jointly. That’s a credit, not a deduction. If you owe federal income tax and already give to charity, plan to route that giving to an SGO in 2027.
If you owe federal income tax and give to education causes, put the Education Freedom Tax Credit on your 2027 calendar. Starting January 1, 2027, a contribution to a qualified Scholarship Granting Organization comes back as a dollar-for-dollar federal credit of up to $1,700, or $3,400 for a married couple filing jointly. Register interest now, act then.
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