Lower Your Taxes While Donating, Even If You Don’t Itemize

Donor-Advised Funds (DAF): A DAF is a way to donate appreciated securities or real estate for future charitable giving. You donate appreciated assets to a DAF (operated by a brokerage, bank, or community foundation), receive a tax deduction for the fair market value in the year of the donation, and it is then invested to earn a return until it is distributed to individual charities. You can then dole out the money over multiple years to multiple charities. If you have a DAF you can donate to TCAT from those tax-advantaged funds. Each fund has a different procedure for holders of DAFs to specify recipient charities; you may need to know the name of the charity (Thurston Climate Action Team) and the TCAT Tax ID: 27-0749507 If you are interested in creating a donor-advised fund, we recommend contacting the Community Foundation of South Puget Sound.

Qualified Charitable Distribution (QCD): If you have a tax-deferred retirement account (IRA, SEP-IRA, Deferred Compensation) and are 70 ½ years or older, you can generally make a distribution from the retirement account direct to a charity. These charitable distributions DO count as part of your Requirement Minimum Distribution (RMD) but DO NOT count as taxable “income” when you do your return. The agency, bank, or brokerage that holds your retirement funds should have a procedure for initiating a QCD. If your funds are in an employer-based deferred compensation program, you may need to roll these over into a brokerage-administered IRA in order to be able to direct QCDs to charities of your choice. The IRS has a detailed discussion of QCDs in Publication 590-B.

If you would like help with either setting up a DAF or initiating a QCD, TCAT has volunteers with personal experience who may be able to guide you through the process.