Conversation tips for Advisors: Offsetting a high-income year

How do I reduce my taxes in an extraordinarily high-income year?

A high-income year offers the perfect charitable planning opportunity to accelerate charitable contributions. Offsetting a high-income year with a substantial charitable contribution allows your client to support their favorite charities in years to come while benefiting from an income tax charitable deduction in a year when the tax deduction limitation will be higher.

Conversation Tips

Tip #1

Long-term appreciated assets can offer greater tax benefits over cash in a high-income year. Tell your clients that by donating rather than selling long-term appreciated assets, they may be eligible for all of the immediate tax benefits associated with their donation, plus they gain the flexibility to support many charitable causes over time with one contribution.

Tip #2

Clients will be eligible to take an immediate tax deduction for each contribution. Clients can deduct up to 60% of their adjusted gross income (AGI) for cash donations and up to 30% of their AGI for appreciated securities when they donate to a donor-advised fund program.

Tip #3

Help your clients understand that using a donor-advised fund will allow them to simplify their recordkeeping and tax preparation. With a donor-advised fund, clients can give now, when they have the money to do so—and contributions are invested and may grow tax-free, which might result in additional dollars for charitable grants.