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Financial Planning

2022 Year-End Charitable Giving for Fortune 500 Employees

We pause to express gratitude for our bounties and the people in our lives, as the holiday season and the end of the year approach. The holiday season is also a time when Fortune 500 employees frequently consider charitable giving. As part of your year-end tax planning, you should consider the tax benefits associated with charitable giving, which could increase your ability to give.

Tax deduction for charitable gifts
Generally, if you work for Fortune 500 and itemize deductions on your federal income tax return, you can deduct your charitable contributions. This may also enhance your donation.

Example(s): Assume you are employed by Fortune 500 and wish to donate $1,000 to charity. One method to potentially increase the value of the gift is to add the amount of any income taxes saved through the charitable deduction. You might be able to give $1,316 to charity at a 24% tax rate [$1,000 (1 - 24%) = $1,316; $1,316 x 24% = $316 in tax savings]. Alternatively, at a tax rate of 32%, you may be able to donate $1,471 to charity [$1,000 (1 - 32%) = $1,471; $1,471 x 32% = $471 in taxes saved].

Keep in mind, however, that the quantity of your deduction may be limited by a percentage of your adjusted gross income (AGI). Employees of Fortune 500 are limited to deducting 50% (currently increased to 60% for financial contributions to public charities), 30%, or 20% of their AGI for charitable contributions, depending on the type of property donated and the type of organization to which they contribute. Generally, charitable deductions in excess of the AGI limitations may be carried forward and deducted over the subsequent five years, subject to the income percentage limitations applicable to those years.

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Ensure you keep proper documentation of your charitable donations. To claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must maintain a record of such contributions in the form of a bank record (such as a cancelled check, a bank or credit union statement, or a credit-card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you are an Fortune 500 employee claiming a charitable deduction for a contribution of $250 or more, you must provide a contemporaneous written acknowledgment of the contribution from the charity. There are additional requirements if you make non-cash contributions.

Year-end tax planning
When making charitable contributions at the end of the year, Fortune 500 employees should factor them into their year-end tax planning. Typically, you have some influence over the timing of your income and expenses. In general, you should time the recognition of your income so that it is taxed at the lowest possible rate, and you should time the recognition of your deductible expenses so that they can be claimed in years when you are in a higher tax bracket.

For instance, if you expect to be in a higher tax bracket the following year, it may make sense to delay making the charitable contribution until January so that you can claim the deduction the following year, when it will provide a greater tax benefit. Alternately, you could transfer the charitable contribution and other deductions to a year in which your itemized deductions exceed the standard deduction. And if the aforementioned income percentage limits are a concern in a given year, you may want to consider shifting income into that year or shifting deductions out of that year so that a larger charitable deduction is available for that year. A tax expert can assist you in evaluating your individual tax situation.

A word of caution
Fortune 500 employees should only deal with reputable charities and avoid those with similar-sounding names. It is common for fraudsters to pose as charities using phony websites, emails, phone calls, social media, and in-person solicitations. Using the Tax-Exempt Organization Search tool on the IRS website, irs.gov, investigate the organization. Don't send cash; use a check or credit card instead.

Added Fact:
Fortune 500 employees should be aware that the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in 2020, includes provisions that encourage charitable giving. Under the CARES Act, individuals who take the standard deduction on their tax returns can now deduct up to $300 ($600 for married couples filing jointly) in cash contributions to qualifying charities, even if they do not itemize their deductions. This above-the-line deduction can reduce their taxable income, providing an additional incentive to contribute to charitable causes. It's important to note that this provision was initially introduced for the 2020 tax year, but it has been extended through the 2022 tax year as well. Source: IRS, "Changes to Charitable Contributions Deductions for 2020," Updated December 21, 2021.

Added Analogy:

As the year draws to a close, consider your charitable giving as a way to create a beautiful tapestry of goodwill. Think of yourself as an artist, carefully selecting the colors and patterns that will bring joy and support to those in need. Just as an artist plans their brushstrokes to create a masterpiece, Fortune 500 employees can plan their year-end charitable donations to maximize their impact. Each contribution is like a brushstroke, adding depth and vibrancy to the lives of others. Just as a well-executed painting brings satisfaction and fulfillment, your thoughtful giving will leave a lasting impact and bring a sense of fulfillment to your own heart. So, take a step back, envision the masterpiece you can create through your charitable donations, and let your generosity paint a brighter future for those in need.

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.


The Retirement Group is not affiliated with nor endorsed by your company. We are an independent financial advisory group that focuses on transition planning and lump sum distribution. Neither The Retirement Group or FSC Securities provide tax or legal advice. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.


The Retirement Group is a Registered Investment Advisor not affiliated with FSC Securities and may be reached at www.theretirementgroup.com.

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