Retiring on your own? How to address unique Charitable Giving and Tax challenges

September 28, 2022

By:  Clinton Miller, CFP®


Autumn is here! Gardens are overgrown and cool nights are on the way. Now is a great time to reflect on the year’s harvest and plan for taxes before the holiday season and year-end deadlines.


Our fall review season is well underway- so naturally we’re talking to our clients about taxes and how to reduce them.  Many of our clients are charitably inclined- and giving is a great way to reduce taxes.


Many of our clients are also single people in retirement. Single women and men face unique challenges in managing taxes with charitable giving:

  • Inherited retirement accounts: Inherited money is wonderful, but new tax burdens often accompany the money. If money is inherited from a non-spouse, managing distributions can be more complicated.
  • Widows and widowers lose their Married Filing Joint status with the IRS: This collapses their tax brackets, often increasing potential tax burdens.
  • Family members and charitable organizations lean on singles for money: Excessive generosity can harm financial health.  Depending on the source and the destination of a gift, giving can actually increase taxes if not planned carefully.


So what’s the best way to make sure a widow retiring on her own gets the most tax bang for those charitable bucks?


Start with the big picture in mind: Don’t let the tax tail wag the dog with charitable gifting.


Consider Qualified Charitable Gifting from your IRA:  You can satisfy annual distribution requirements from your IRA without increasing your taxes if you send the distribution directly to a charity.  This is a big tax win, especially for a taxpayer filing Single and taking the standard deduction.


Coordinate with your tax advisor:  It’s crucial to bring your tax advisor up to speed on your charitable giving each year, especially if you do a Qualified Charitable Distribution.  If they don’t know, you may not get the tax benefit.


Automate wherever possible:  You can usually set up your investment and retirement accounts to send out regular payments to the charities you care about.  Put your giving on Autopilot so it gets done each year without any work for you.


Tax conversations don’t have to be painful.


We love this time of year because our conversations have a positive impact in our clients’ lives.  We take a pleasant, conversational approach to our clients’ goals.  We stay out of the weeds so our clients can make smart, informed decisions.  And our clients love when we coordinate with their tax advisors so they don’t have to hassle with details.


If you have financial questions about tax planning, investments, or retirement, now is a great time to get answers.  Schedule a meeting or phone call with an advisor here.