fbpx window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'UA-156569540-1');

Tag: Charitable Giving

Your Guide to Year-End Financial Planning

Your Guide to Year-End Financial Planning

Posted on by Emily Promise

As 2023 comes to a close, now is a great time to review your financial plan. With 2024 coming quickly, it’s crucial to reevaluate your financial objectives, consider any life changes impacting your finances, and stay informed about the latest tax and finance developments. Before your yearly financial advisement meeting, here are four areas to consider for your year-end financial planning.

Tax Planning Strategies

The first step in your guide to financial planning, as the year ends, is to nail down your tax planning strategies. First, be sure to understand and utilize any tax deductions and credits available to you. Investigate credits such as child tax credits, education credits, and energy efficiency credits. A financial professional can also help you discover and optimize various deductions and credits.

Additionally, reexamine your finances to see if you can reduce your taxable income in other ways. One way to do so is to defer your income. Deferred income refers to income you have received but not yet earned. This is common if you offer products or services and have received advance payments. Another way to reduce taxable income is by accelerating your donations. Giving multiple years worth of charitable contributions in one year can bring you closer to the threshold. 

Accounts such as FSAs and HSAs can also offer tax relief. Talk to your financial advisor to see if you qualify. They can help you choose the best option for your unique financial situation, understand your balances, your rollover options, and how to maximize your contributions.

It is important to note that tax laws change frequently. Thoroughly research any tax law changes that will affect you over the upcoming year.

Investment Portfolio Review

When conducting your year-end financial review, give your investment portfolio a check-up. Assess risk tolerance and make adjustments accordingly. Strategize your stock options. Is selling in January 2024 more tax-efficient than doing so this year? You can also look for opportunities for tax loss harvesting. This would involve selling underperforming investments to offset gains, potentially reducing your taxable income. The rules surrounding tax-loss harvesting are complex, so it is best to seek professional advice before taking action. Your financial advisor can help you assess the timing for selling your stock as well as your best options for investment overall. 

Retirement Planning

Year-end is a great time to fine-tune your retirement plans! Are you maxing out your retirement contributions? If you are not currently, it is worth considering, especially to leverage employer-match benefits in workplace plans or increase traditional IRA contributions. Contribution limits change annually, so make sure you are up to date with the latest rules.

Additionally, if you inherited an IRA, specific rules apply to you in regards to how much you have to take up annually, or if it’s your IRA and you’ve reached the required minimum distribution age, you also have to take out distributions.

Another consideration is Roth conversions. If your current tax bracket has room, converting traditional IRA savings into a Roth IRA might be beneficial. This strategy involves paying taxes upfront for tax-free growth later. Consult your advisor to see if this suits your long-term tax strategy.

Make sure that you’re balancing what you’re setting aside for retirement as well as taxable savings. You don’t want all your money in one bucket or the other!

Charitable Giving

The end of the year is often referred to as the season of giving – it’s a great time to look at your charitable giving. This can be a great thing to do from a tax perspective as well as to fulfill personal needs.

The first thing to do is look at donor-advised funds, which are a flexible aspect of charitable giving. You can put lump sums of cash and appreciated securities into a donor-advised fund. From there, you’re able to get a full tax deduction from the amount of money that you put into it. You’re able to give these funds out for however long you want to the charities of your choice.

If you’re at the required minimum distribution age, you can start a qualified charitable distribution (QCD). This allows you to take your RMD (required minimum distribution) and give it directly to the charity of your choice.

Generally, a donor-advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution the organization has legal control over it. However, the donor, or the donor’s representative, retains advisory privileges with respect to the distribution of funds and the investment assets in the account. Donors take a tax deduction for all contributions at the time they are made, even though the money may not be dispersed to a charity until much later.

Are you ready to talk to a financial professional about your year-end financial planning? Contact Blakely Financial today to get started.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Giving Tuesday: The Power of Charitable Giving

Posted on by Emily Promise

One of the greatest parts of the holiday season is giving. Giving Tuesday, a global generosity movement, takes place on the Tuesday after Thanksgiving each year.

What is Giving Tuesday?

Giving Tuesday began in 2012 as a simple idea: a day dedicated to encouraging people to do good. Since then it has grown into a movement meant to unleash the power of people and organizations to transform their communities and the world at large. It demonstrates the power of philanthropy and collective action, inspiring hundreds of millions of people a year to give, collaborate, and overall celebrate generosity. 

How to Get Involved

Everyone can participate in Giving Tuesday and there are various ways to contribute. The first step to getting involved is choosing a cause that resonates with you and your values. Research the organization of your choice to ensure your contributions go somewhere reputable. After choosing your cause, there are many ways to give. Monetary donations are a common method, but you may also consider donating your time, skills, or other goods when appropriate. You can also participate in local fundraisers, community drives, or events.

Charitable giving is not limited to individuals – it can be embraced by businesses and organizations as well. Ask your employer about a matching program for employee donations, a team volunteer day, donating a portion of sales, or even donating products. Engaging in those activities will boost your organization’s corporate social responsibility while creating a significant positive impact on your community. 

The Impact of Charitable Giving

Charitable giving is vital in addressing various societal issues such as poverty, hunger, education, health, and environmental conservation. There are a number of nonprofits and charitable organizations that do essential work for these causes, making tangible differences in the lives of those who need it most. Many of these organizations rely on the support of donors and volunteers to serve their respective communities. Donated dollars, goods, and time, contribute to providing meals to those who need them, educational opportunities to underserved communities, preserving natural habitats, and much more making the impact of philanthropy undeniable. 

The Joy of Giving and Its Rewards

One of the most amazing aspects of giving is that it does not only benefit the recipients – it benefits the givers, too! Giving to others can be personally rewarding, leading to increased happiness and reduced stress. While you’re making the world a better place you’re also enhancing your overall wellbeing. In order to qualify for tax deductions, donations must be made to qualified organizations from the IRS guidelines.

In addition to emotional benefits, philanthropic giving also offers tax benefits including deductions, exemptions, and estate planning benefits. By working with your financial advisor, you can maximize these benefits while aligning your philanthropic goals and financial objectives.

Giving Beyond Giving Tuesday

Giving can be a year-round endeavor! While Giving Tuesday is a great way to get started, it is not the only opportunity to give. Talk to your financial advisor about building charitable giving into your long-term financial plan. Determine a fixed amount or a percentage of your income or assets you would like to allocate to philanthropy. Explore various philanthropic vehicles to maximize the impact of your donations. As a high earner, you have the unique opportunity to make a meaningful and lasting impact on the world through philanthropy. Start building your philanthropic legacy today!

Ready to begin building your charitable giving into your financial plans? Contact Blakely Financial today to get started. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Building a Philanthropic Legacy: Making a Meaningful Impact

Building a Philanthropic Legacy: Making a Meaningful Impact

Posted on by Robert Blakely

High earners have a unique opportunity to make a positive, meaningful, and lasting impact on society through philanthropy. By leveraging your financial resources, you can begin building a philanthropic legacy that resonates with your values and can continues for generations to come. 

Understanding the Power of Philanthropy for High Earners

With ample financial resources at your disposal, it is important to recognize your potential to make a positive impact on society through strategic giving. Your financial success grants you the power to create a better world through your philanthropic efforts – embrace the responsibility that comes with your financial success. Use your position of influence to address pressing social issues, support important causes related to your personal values and passions, and encourage positive change on a broader scale. Even a small effort can inspire others to do the same. 

Philanthropic Vehicles

There are several philanthropic vehicles available to high earners looking to make an impact. Each resource has its own benefits and considerations – choose one that coincides with your own goals, level of involvement desired, and tax implications. Some options are:

  • Private foundations are private organizations set up for charitable purposes, typically with limited funding sources. The benefits of a private foundation are flexibility and complete control over charitable giving.
  • Donor-advised funds are established as public charities and managed by a third party, leaving donors with the benefits of simplicity and professional guidance.
  • Charitable trusts are irrevocable trusts created for charitable purposes. These are set up to benefit you, your beneficiaries, and a charity simultaneously. Other benefits include tax advantages and the ability to plan long-term.

Talk to a financial advisor, like Blakely Financial, to learn more about each philanthropic vehicle and discover how to best leverage your financial resources when building a philanthropic legacy. 

Effective Giving Strategies

To begin developing effective giving strategies, it is essential to establish a clear philanthropic mission. Once your charitable goals are set, identify causes and organizations aligned with your values. Research the past success of potential recipients to ensure your donations are being utilized effectively. Consider prioritizing your giving in areas where your contributions can make a significant and lasting difference. 

Incorporating Charitable Giving into Long-Term Financial Planning

When creating your long-term financial plan, consider integrating philanthropy to ensure sustainable giving. Determine the percentage of your income or assets you would like to allocate to charitable endeavors and explore different techniques like planned giving, endowments, multi-year grants, and more to maximize the impact of your donations. 

Philanthropy also offers the opportunity for various tax advantages including deductions, exemptions, and estate planning benefits. It is important to understand these benefits and stay informed about the latest laws and regulations. Work with a financial advisor to seek out the best strategy for aligning your philanthropic goals and financial objectives and maximizing the tax benefits of your charitable contributions.

Engaging in Impactful Philanthropy Beyond Financial Contributions

Philanthropy goes beyond simply writing a check – high earners can also contribute their time, expertise, and networks to make an even more meaningful impact. Consider volunteering your time, serving on boards, or offering pro bono services in your professional field. Additionally, explore social entrepreneurship or impact investment to leverage your business knowledge for social good. Encourage your family to get involved as well, allowing values to be passed down and creating a legacy of giving.

Building a Legacy

Your charitable efforts can continue beyond your lifetime and leave a lasting legacy. Encourage family involvement to pass down the values of giving and develop a succession plan to ensure these endeavors continue after you’re gone. By building a philanthropic legacy as a high earner, you are making a meaningful impact with your high income that extends far beyond your financial success. 

If you are looking to make an impact and begin building your philanthropic legacy, the Blakely Financial team is here to help. Contact us to get started today. 

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals. Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.
Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
End of 2022 Blakely Financial Financial Planning Tips & Updates

Financial Planning Tips & Updates

Posted on by Steve LaFrance

The end of the year is a time for reflecting on what happened and planning for what is to come.  As 2023 draws closer, we wanted to highlight the changes that occurred in the past year, tax considerations for this year and next, and how you can prepare for a prosperous 2023.

Changes in 2022 that May Impact You

Some financial planning limits have changed for 2023, which may impact your retirement plan, Social Security, Medicare, federal tax rates, and standard deductions. Learn more via the links below, or consult the IRS website for full details on contribution limits. 

401(k) Contribution Limits

In October, the IRS announced an increase in the maximum amount you can contribute to your employer-sponsored retirement plan in 2023. 

Due to high inflation, the cost-of-living adjustment means maximum retirement contributions will be rising almost 10% in the upcoming year. The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan has been increased to $22,500 (which is up from $20,500 in 2022). Annual contribution limits have also been increased for traditional and Roth IRAs, up to $6,500 from the $6,000 limit of 2022.

Social Security Benefits

If you receive Social Security benefits, you can expect them to be boosted by 8.7% in 2023. This cost-of-living adjustment (COLA) was announced by the Social Security Administration on October 13th, and it is a massive increase from that of previous years. 

Notice 2022-53

The notice, issued by the Department of Treasury and the Internal Revenue Service, means updated regulations of required minimums for distributions, or RMDs. This notice comes in the wake of the significant confusion around the SECURE Act of 2019. This notice will provide some penalty relief to those who avoided taking RMDs as a result of the SECURE Act.

2022/23 Tax Considerations

Increase withholdings

Increasing your withholdings can be beneficial at any time of the year to ensure you will not be met with any unwanted surprises come tax season. Though it may not make a significant difference to increase withholdings close to the end of the tax year, it can be a great way to plan for 2023.

Save more for retirement 

Though retirement savings should be a year-round consideration, the end of the year is an optimal time to reassess the amount you have contributed throughout 2022 and prepare for the year ahead. Make sure you have claimed your full 401(k) match before the end of the year, and contribute to IRAs before tax day, to reap the full benefits of these accounts. Similarly, consider setting up a Health Savings Account (HSA) for the tax benefits and savings on healthcare. 

If you are 72 or older, do not forget to withdraw your required minimum distributions from traditional IRAs or 401(k)s before the end of the year! 

Defer income to next year

If you choose to defer any of your income into the next year, you can spend that additional cash on investments, which would otherwise go toward income tax. If you are not planning on entering a higher tax bracket in 2023, there are multiple ways for you or your business to defer taxable income until the new year. Another way to lower your tax bill is to accelerate deductions, which can be done by making a charitable donation before the end of the year.

Charitable Giving Strategies

The holidays are the perfect time to make a charitable donation to help your family get into the giving mood. There are many ways to give to charity, but if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund.

Donor-advised funds offer a way to receive tax benefits now and make charitable gifts later. A donor advised fund is an agreement between a donor and a host organization (the fund). Your contributions are generally tax-deductible, but the organization becomes the legal owner of the assets. You (or a designee, such as a family member) then advise on how those contributions will be invested and how grants will be distributed. Although the fund has ultimate control over the assets, the donor’s wishes are generally honored.

 

How can you prepare for next year?

In addition to your preparations for tax season, the end of the year can be a great time to take a wider look at your financial progress and goals. Do you still aim to retire at a certain age? Are you still saving for the same goal (vacation, car, property)? Take note of how far you have come, and review what needs to be adjusted in the year ahead!

 

The holidays can be a very busy and stressful time; we hope these insights will help you end the year on a positive note and guide you into a financially successful 2023! As always, reach out to the Blakely FInancial team if you have any questions about your portfolio.

 

Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM  to see what other financial tips we can provide towards your financial well-being.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser.