Five Ideas for giving to your favorite charity (OWAA) in 2022 and beyond

A girl on a mountain with a river in the background holding a gift

Consider the following, in consultation with your own estate planner and tax advisor.

Charitable Distribution from your IRA.  If you are over age 70 1/2 and have an IRA, you may instruct that up to $100,000 be distributed to a qualified charity directly from the IRA, each year, without the distribution being counted as part of your income.  Taking the distribution and then giving it to a charity would cause the full amount to be included in your taxable income, resulting in increased income taxes for you.  With a Charitable Distribution from the IRA, neither you nor the tax-exempt charity incurs an income tax obligation.  If you are over age 72, you are subject to the Required Minimum Distribution (RMD) rules.  Those rules say that you must take a calculated amount from your IRA or incur a penalty.  The tax code allows you to treat charitable distributions you make from the IRA as part of your required withdrawals, although they will NOT count as income to you if the check is written by the custodian of your IRA.  Note that these distributions are not available from other retirement funds besides IRAs.

Gifts of appreciated property.  If you own anything that has increased in value since you obtained it (land, antiques, art, stocks, etc.), the difference between selling it and donating it to your favorite charity (OWAA) is similar to taking money from your IRA.  Sell it and you have to pay a form of income tax (capital gain tax), a tax on the gain in value during your ownership.  If you donate it to a tax-exempt organization such as OWAA, however, you may benefit from a charitable deduction against your income taxes for the full current value of the asset, and neither you nor the charity pays income taxes related to the asset.  The charity can sell it instead of you selling it, and no taxes are owed on the gain.

Naming your favorite charity as beneficiary of your life insurance.  Many people retain life insurance beyond needing it for its original purpose.  If it was to provide for family in the event of an early death by a spouse or working parent, such concerns lessen or disappear over decades of employment and asset accumulation.  If the insurance was intended to provide funds to meet estate tax obligations, that is now likely to be irrelevant for most people, as the amount of wealth exempt from such taxes has grown over the last several years from $600,000 to $12.06 million in 2022 ($24.12 million for a married couple), and will be $12.92 million in 2023 ($25.84 million for a married couple).  If you have no continuing need for the life insurance, why not leave it to your favorite charity (OWAA)?  Also, in case you do have wealth sufficient to trigger an estate tax, naming a charity as beneficiary may still make sense, since that is one way to exempt from the estate tax part of your assets normally subject to the tax.

Naming your favorite charity as beneficiary of your pre-tax retirement plan.  Unlike the charitable distributions from IRAs discussed above, this is naming your charity (OWAA) to receive whatever is left in your retirement fund at your death, or some portion of it.  If you name individuals as such beneficiaries, they still will have to pay income tax on whatever they receive from your pre-tax retirement funds.  A tax-exempt charity such as OWAA, however, will not have to pay taxes on what it receives from such funds.

Naming your favorite charity as a beneficiary at your death.  This may be done by simply leaving a gift to your charity (OWAA) at your death under the terms of your will.  Most states now also allow for individual assets of all types (accounts, stocks, bonds, land, vehicles, collectibles) to have Pay On Death or Transfer On Death beneficiary designations that take effect at the owner’s death, making the designated beneficiary the instantaneous owner of the asset, thus exempting the asset from any need to process it through a usually costly probate court process.

For additional information about the kinds of assets OWAA will accept (most of them), and additional ways of accomplishing such gifts, see OWAA’s gift acceptance policy, posted at the bottom of

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