Postseason tax tips for substantiating charitable deductions.

April 15 is in the rearview mirror, but that doesn’t mean tax issues aren’t still top of mind for you and your clients. It can take several weeks or even longer to decompress after a busy tax season. And, for many advisors and their clients, tax season isn’t over because there are so many taxpayers (19 million, according to the IRS!) who file extensions.  

The IRS’s requirements for documenting and deducting gifts to charity are relevant year round and may be especially top of mind in the aftermath of April 15 (and leading up to October 15). Note the following: 

–First and foremost, to be eligible for your client’s tax deduction, the recipient must be a qualified charitable organization under Section 501(c)(3) of the Internal Revenue Code. The taxpayer must also provide written documentation of the gift. Watch out for clients’ gifts to crowdfunding initiatives through GoFundMe and other similar providers; many of these contributions will not be eligible for a tax deduction.

–Note that when your clients work with Hudson Community Foundation (HCF) to carry out their charitable giving, your client can rest assured that their contributions meet the requirements for a charitable recipient’s status. This is because HCF itself is a 501(c)(3) public charity. 

–Your clients who work with Hudson Community Foundation know that our team handles the receipt documentation for tax returns. Whether your clients give cash, appreciated securities (usually a very good idea to maximize tax benefits), or other non-cash gifts such as real estate, HCF will provide the appropriate documentation of receipt to help ensure that your client achieves the intended tax result. 

–Hudson Community Foundation will help you and your clients understand when a particular gift to a fund at HCF needs to be substantiated by a qualified appraisal (in the case of a real estate gift, for example). 

–Some charitable gifts require months, if not years, of planning. That’s certainly the case with gifts of closely-held stock. Closely-held stock can be an extremely effective gift to a fund at Hudson Community Foundation if it is structured correctly. In particular, the gift must be completed well before the client begins a process to seek a buyer for the company or entertains unsolicited offers. 

For any of your clients’ charitable giving needs, please reach out! Our team is here to help you with philanthropic planning all year long. 

We welcome conversations to help donors give to their favorite causes. Hudson Community Foundation enables simple, smart, and meaningful family philanthropy. Although HCF is a public charity, it does not promote one charitable cause. Rather, HCF is committed to expanding the capacity of family philanthropy - no matter where you live.

 Read more about Donors Guide to Donor Advised Funds.

With a fund at Hudson Community Foundation (HCF), advisors can manage the charitable assets on their preferred platform at any amount. Assets stay under your management. You can provide your clients with the consistent investment advice they expect. We are your partner in charitable giving!

The team at HCF is a resource as you serve your philanthropic clients. We understand the charitable side and are happy to serve as a secondary source as you manage the primary relationship with your clients. This blog is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.