Gifts that grow

ALEX ROCA: Hello. And thank you for joining Women Talk Money. My name is Alex Roca and I will be your host for today's conversation. Today we're talking about financial gifts, those thoughtful ways that we can say, hey, you're important to me and I care about your future. I also want to call out that today's session is going to look a little different than it may have in the past. We have three guest panelists, and each is going to join us for a short period of time to speak to their specific area of focus.

 

First, we have Vanessa Lee, director of advanced planning, who recently relocated to Denver, Colorado. Today, she's going to be talking to us about gifts for you. Yes, you and gift for others. Then Dani Stadelmann, an investment consultant and mom of five incredible daughters, will join us to talk about gifts for kids. And last but certainly not least, regional Vice President at Fidelity Charitable, Huong Do will join us to talk about charitable giving and how we can pay it forward while being tax savvy. All right, Vanessa, are you ready to kick this thing off with me?

 

VANESSA LE: Yeah.

 

ALEX ROCA: Let's start with the most important, but often the last person on your list, you. So Vanessa, why is it so important to prioritize yourself during the holidays?

 

VANESSA LE: Because you're important. I read a startling statistic the other day. According to a survey done by Today.com, 97% of moms bear the brunt of the holiday prep. And parent or not, the holidays are busy for all of us. If we're doing almost all of the work to make these times special, we deserve to treat ourselves a little bit. Am I right or am I right?

 

I want to ask all of you watching a question. Do you buy yourself a present during the holiday season? And please feel free to give your answer in the chat, but I hope the answer is yes. If not, then this is the year to change that, because the airlines have a point when they say to put your own oxygen mask on first before you help anyone else. Because if you aren't putting time and love into yourself, then you're not going to be able to give that to others.

 

And I spend a lot of time shopping and wrapping gifts for others during the holidays, and I never used to include myself on the shopping list. But now, I give myself a special guilt free treat every year, especially whenever you're wrapping all those gifts and you're seeing all of them and you realize none of those are for you. So this is the year to do that for yourself.

 

ALEX ROCA: I appreciate that because I think we've been hearing that in so many in different ways. So we need to take care of ourselves in order to take care of the ones that we love. Now, I do see here on the chat-- on the poll, some of us treat ourselves, others may have other priorities, and that's OK.

 

Today's focus in our conversation is the financial gift option. Because while we're women-- while we're human and we love to tear open that gift wrapper, we love to see what the surprise present is, we also have the option to share a gift towards someone's future, which is just as beautiful. So with that Vanessa, we're sticking with gifts for ourselves for just a minute longer here. What are some of the options where we can, as you said, treat ourselves financially?

 

VANESSA LE: Yeah, everybody loves their tangible items. It's a way of self-expression. But investing in your own future, is a way of giving your future self options and setting yourself up for success. So I'm going to share four key ideas that can have a meaningful impact on your future. The first one is to up your retirement contributions. Most people's long-term goal is to save as much as they can for retirement. So give yourself a little boost here.

 

There's a well-known saying that, a little can go a long way. That's especially true when saving for retirement, because you may be over a decade away from retiring. So think of all of that time that money that you're putting away right now has the potential to grow. Consider doing this annually too if you're able to until you reach that contribution limit. There might also be an automatic increase program that you can look into so that you can set it and forget it. And one of the favorite tips that we share on Women Talk Money, which you can do today, is to increase your contribution by just 1% more. It will help make a difference and your future self will thank you.

 

The second one would be, if you're already maxing out your employer plan, consider opening up an IRA or adding to it if you already have one. This is just another way to help you save for retirement and could give you your future self a leg up. Consider a Roth IRA if you want to diversify your taxes and withdraw tax-free in retirement. And then if you are enrolled in a high deductible health plan, consider opening up an HSA account. Or if you already have an HSA, consider adding to it.

 

And as women, we tend to pay 18% more for our health care over our lifetime compared to men. There's going to be a link in the chat that's a guide for planning for women's health care costs. So an HSA and saving in an HSA offers triple tax benefits, meaning the contributions that you put in are pre-tax contributions or tax deductible. You don't pay taxes on the potential growth that your contributions, that you're making. And then, you don't pay taxes when you withdraw the money, as long as you're using it for a qualified medical expense.

 

And then lastly, if you have all of these accounts in place and they're funded, you can consider opening or adding to an investment or a brokerage account to help boost those savings and potentially grow your wealth over time. And I said savings, but I don't mean in a savings account.

 

So if you want to take a look at this slide for a quick example. And this is just a hypothetical example to show you the growth potential, but it shows how a one-time contribution of 10,000 grew over 30 years. In a traditional savings account, it roughly doubled which, don't get me wrong, that's great. But if it were invested, it would have grown by over 150,000, which is quite the difference.

 

ALEX ROCA: That's such a powerful slide. And Vanessa, I want to thank you for going over four different options to choose from, because you think about it all the time, but you never think about it as gifts for yourself. So we really hope that there is something for everybody on that list so that you can feel good about giving yourself a well-deserved end of year boost. Now, speaking of those four options, I do want to ask, are there any contribution limits or any other implications that we should be considering when thinking about these gifting options?

 

VANESSA LE: Yeah. So each account has its own considerations, and I don't think we have time to get into the nitty gritty of all of them. So we can bring back that initial slide that had the four options. And we've added annual contribution limits for your reference. As for tax implications or any other implications like fees, if you choose a professionally managed investment account, that's where a financial professional can help you.

 

ALEX ROCA: All right. I think we have our marching orders for number one, a.k.a. Ourselves. So on to the rest of the list. So I want to pivot from gifts to ourselves to gifts to others, which can sound like a catch-all, but I want you to think more about siblings, friends, parents, or maybe even other relatives.

 

Now, since we can't directly deposit money into somebody's account and sometimes giving cash can feel a bit impersonal, and you also never know what they're going to use that money for, it may unintentionally fall into that everyday expense. So what are some of the meaningful options for these people on our list that isn't just a gift card or direct money?

 

VANESSA LE: You said pivot, the Friends episode of Pivot, it popped into my head. So if anybody else is a Friends fan, let us know. But I do love this question, because sometimes cash can feel impersonal and you might think that it is a good option, but I do want to share a few others that you may not have thought of.

 

So there are savings bonds or other fixed-income securities, which are investments that provide regular interest payments, and then they return your principal at maturity. So think of CDs as well. Think of this as giving cash, but they can't use that cash right away. And that cash gift is going to grow over time. So this is going to indicate that you're focused on your loved ones financial foundation and you want to instill good savings habits.

 

There are also funds, ETFs, stocks, fractional shares of a company that they might love. If you know somebody that has a favorite brand or they only shop at one place, you can always gift them shares or stocks in that company, and it gives them a sense of ownership, pride, and it will provide growth potential from that initial gift. So it's like a gift that keeps on giving.

 

And then there is a link in the chat for everything that you would need to know about gifting shares into a Fidelity account. And then there are also prepaid services. Think about-- I don't know, treating yourself with a spa day or maybe ordering takeout. There are also subscriptions and streaming platforms. There's educational and learning platforms. Games. The average American pays roughly $1,000 on subscriptions. Paying for this as you're shaking your head like it's a lot.

 

Paying for one of those for a year or I don't know if there's an option, maybe month, two month. You can decide how long you want to gift that subscription for. But it's a great way to ensure that your recipient receives something that has value. It shows that you pay attention to their interests and preferences. It's a thoughtful gift.

 

And then you can also think about anyone that's navigating a major life change, like becoming a new parent, going through a divorce, moving. I just moved. It was very expensive. So people have a lot going on. And prepaid services like meal delivery, house cleaning, anything like that, can offer practical support and emotional relief. And asking for help is hard. It can make us feel vulnerable. So offering gifts like these, can be a way of offering help without anyone having to ask. And then you can always add in the why I'm giving you this financial gift, and that can encourage an open dialogue with your loved ones.

 

ALEX ROCA: I appreciate that. I want you to know that when you quoted the $1,000 on streaming services, I did the math in my head, and I was like, I think mine is more than that. So I wonder how many people, if they really took account, they would see just how much goes towards those streaming services. And personally, I would love to receive anything that you just listed off. If my mom is hearing today, somebody to clean my house is the perfect Christmas gift this year. So Vanessa, one last question for you. Are there any gift limits that we should be aware of?

 

VANESSA LE: Yes. There is an annual gift limit. One person can gift-- one person can give to another. However, there is no limit on how many individuals you can gift to. That limit is 19,000 per individual, or 38,000 per married couple. Meaning, each of you can gift the same person 19,000.

 

So the annual limit generally increases year over year to account for inflation. But any amount beyond that 19,000 limit, will involve using part of your lifetime federal gift tax exclusion, which I don't believe we have time to go into that today, but there is going to be a link in the chat if you're interested in learning more about all of those limits. And then also, please call us if you have any questions or need any help deciding your financial gifts. We would love to be able to help you with that act of service or that nice gesture for the holidays.

 

ALEX ROCA: Thank you so much Vanessa for sharing all of that wonderful information. And I am so excited that you were able to join us today. Now, I want to welcome Dani Stadelman to chat with us about financial gifts for kids. Hi, Dani. How are you?

 

DANI STADELMANN: I'm doing well. Thank you so much for having me back.

 

ALEX ROCA: We love having you. We love having you. When we decided to do an event like this one, we just knew that you would be the perfect person to talk to about gifts for kids, particularly financial gifts for kids. So we're going to dive right in. Dani, you have five daughters. Believe it or not, she has five daughters. So you can probably confirm that kids usually get things like toys or clothes for the holidays and birthdays. But how can financial gifts have an effect on a kid's future?

 

DANI STADELMANN: Alex you're right and I get it right. Whoever's giving the gift, they usually want to see some sort of reaction from the recipient, especially a child. They want to see them rip open the paper, play with the toy, or put the outfit on that maybe you had bought the child. And instant gratification really is nice. So don't get me wrong, it's special in its own regard. But kids do grow out of both toys and clothes.

 

And with five daughters and by the way, also four grandchildren, our house is quite a chaos of paper and boxes after we've gone through our Christmas morning. But that instant gratification eventually comes to an end at some point. So I remember when I was eight years old, I was getting a live brand new Cabbage Patch doll, a.k.a., my brother Michael.

 

And at the same year, I was begging Santa Claus for Christmas to have the brand new Cabbage Patch newborn edition. It smelled like baby powder. It had a bottle. And I carried that doll for two years. I never picked it back up again though. And I know the lengths that my mom went to finding that and talking to Santa Claus to make sure that was under the tree.

 

Whereas if we start thinking about financial gifts for kids, this can really open up doors for children. And these are doors that kids don't even know that they exist yet. So let's think about your experience, the audience, and ask yourself if you had a fully funded college account or potentially a retirement savings account from childhood, what would that have done for your situation right now? Meaning, how would that have changed your trajectory? Would it have been different for you?

 

And also think about the relationship that maybe you have with money. Maybe you didn't learn much about it in school, I know I didn't. Or at least at a young age, and maybe you just had to teach yourself once you were getting bills in the mail. This brings me to my daughter, who's 23 years old, Jackie. And my daughter calls this phase of life, when you start getting those bills in the mail and learning all about how to pay them and be responsible, this is adulting as she calls it. And it's not as fun as she thought it would be.

 

So choosing financial gifts can not only expose children and kids to investing in money management from a very young age, but honestly, this is to really help encourage and empower them to have a healthy foundation-- financial foundation to start off with.

 

ALEX ROCA: That's so powerful Dani. And what options do we have to give kids something financial? And before you answer, because there's quite a few options, can we categorize them into three different category options-- education, retirement, and let's call it flexible investing? Start with education for me please.

 

DANI STADELMANN: Absolutely. So specific to education, is a 529 savings plan. You may have heard this on the news and on the radio. But this can be a really great way to save for your children's education in a tax smart way. So any earnings that are in this account, they are going to grow federal income tax deferred, and basically can be withdrawn tax-free if used for qualified education expenses.

 

So what is an example of a qualified education expense? One, you can go to the irs.gov website to find their entire list, but it could be things like college tuition, private school for kindergarten through 12, room and board textbooks, et cetera. So just double check. Make sure it abides by the IRS policies and rules that they have in place. But anybody, not just the parent, but anyone can contribute to this type of account, a 529 account, on behalf of the child. So think about grandparents, aunts, uncles, friends.

 

But just one caveat that we should definitely go over when it comes to how much you're contributing, so whoever contributes is still limited to $19,000 per individual gifting limit. If you remember, this is what Vanessa has mentioned earlier. But since each state sponsors its own 529 plan, each state has their own rules about total account contribution limits. So just be sure to double check your thresholds. You can always lean on a CPA or tax advisor as well.

 

Another nice benefit of this type of account is that it if the plans change. And when we have children at newborn, just like my Cabbage Patch doll and my brother, and you have about 18 years or so of saving for that college in the 529 plan, but what happens when the child doesn't pursue college or higher education? And there are still going to be tax efficient ways that you can still use those 529 funds. So consider discussing your options with a financial professional like myself or anybody here at Fidelity. We can help you.

 

ALEX ROCA: Absolutely, we can. And 529 can be such a powerful tool and we know that college can be expensive. And to Dani's point, the flexibility is there if they choose a different path. Now, I want to call out something from a study that we completed at Fidelity. It's the Fidelity's 2025 College Gifting Study, because it's so relevant to the conversation. 79% of parents would welcome contributions to their child's college savings account in lieu of traditional gifts. And 62% of them, actually would prefer it.

 

So just something to keep in mind, this holiday season, I think my sister with her three boys would agree. Now, Dani, just for the sake of time, very quickly, can you tell us a little bit more if we wanted to focus on a child retirement, what can we do besides just put cash on a card and hope that they save it? What options are there?

 

DANI STADELMANN: Yes. This is something I love sharing with my clients all the time. So a Roth IRA for minors, A Roth IRA for kids provides all the benefits of a regular Roth IRA, but it's really geared towards children under 18 who also earn an income. So when we think about contributions to this account, they are capped at the amount of the earned income by the child, or it's capped at the annual contribution limit, which is $7,000 in 2025, and it's going to be whichever is less.

 

However, parents can help. And the way that I enjoyed amplifying and empowering my kids to save, you can amplify their retirement savings by offering a match contribution of their own so long as the total does not exceed the limit. So for example, let's say your child made $2,000 walking dogs this summer, which Taylor, one of my youngest daughter, that was an idea she had many, many summers ago. Gives them a little entrepreneurship. And at the same time, your child could take $1,000 of what they earned and put that into the Roth IRA, and then I can match that $1,000. So now it's the full $2,000 being contributed into that Roth IRA.

 

Let's say your child decides to mow lawns for the summer and in fall season, they may make $10,000. They could contribute up to the full $7,000 limit in 2025, or you both could contribute in a hybrid way as long as it doesn't go over that $7,000 limit.

 

Now, if your child is, let's say, not filing a tax form and that they're reporting their income to the IRS, the earned income, even if it's very minuscule, or you might think it's de minimis, it's very, very important that you consider maintaining a written log of all of the earnings that your child had, just in case you need a validation letter in the event of an audit.

 

ALEX ROCA: So Dani, what are some of the options to give gifts that we may not want to bucket into either the education or retirement accounts? Is there anything more general that we could do?

 

DANI STADELMANN: I would say, as far as in more general, general custodial accounts, those come into play, or maybe you've heard of them before, they're called an UGMA or an UTMA. So UGMA, U-G-M-A, or UTMA, U-T-M-A. It's just a brokerage account, and it's very similar to your own brokerage account that you or I would have, but an adult has to open the account and manage it on behalf of the child. And then the account is transferred to the child once they become a majority age, which is somewhere between the age of 18 and 25. And that really depends on the state that you reside in. So just like our custodial Roth account, anybody can contribute to this type of account as well up to the $19,000 limit for tax-free gifting in 2025.

 

Now, I would say, unlike the two accounts that we just talked about already, this is a type of account there is no annual threshold. So that's a nice benefit. And then something to keep in mind with these accounts, any earnings are going to be subject to taxes, so just like any other brokerage account. However, anything in the account is considered assets of the child. And one thing to really keep in mind with an UGMA or UTMA, is the time when they do decide to go to college. When you are filling out financial aid forms, this is an account that will be included. So it could affect how much financial aid the child does receive.

 

I also want to call out a very specific account, and this is probably where I get even more excited than the Roth for minors. So Fidelity has what's called the Youth account. And this account is very specific for kids ages 13 to 17. And while a parent does have to open up the account or guardian, it could be a parent or guardian, they have to open up the account on behalf of the teen. The brokerage account is all their own. It's not a custodial account like an UGMA or an UTMA or joint account. It's also not joint with the parent. This is just the child or the teens youth account.

 

But parents and guardians, they get to monitor all the activity. So the account can be a great way to introduce your children to not just investing early and help them build those financial habits, but really how to manage responsibly. Nice thing too about this Youth account, parents can request a debit card for this account.

 

Does require $100 minimum to have that debit card. But this account has no subscription fees, no account fees, no minimum balances to open it. And anybody can contribute. So parents can easily transfer right to their teen, even set up an allowance maybe. But I just want to reiterate, contributing to this account can be such a great way to gift to a child.

 

ALEX ROCA: It sounds like it's good news all around for the kids in our lives, because there are some really good options that you just delineated for us Dani. How can someone decide which account may be right for their child? And this is going to be our final question here.

 

DANI STADELMANN: Yes. I think the very first thing, let me just acknowledge, there is a lot of options and information to digest today, so it can seem very overwhelming. That's why I'm here. That's why Vanessa is here. And Houng is here. We are here to help you. We are the financial professionals in your corner. And we can weigh the pros and cons to really help make that decision. And that way, you feel the understanding and empowerment. And call us anytime. Reach out. We're definitely here to help you with that.

 

Let me lean in though, it is also critical and important that you reach out and lean into your tax professional or CPA. The reason for that, is Fidelity advisors we are not licensed for tax advice. So you do want that tax professional in your corner just to solidify the types of accounts and tax strategies maybe that you'd like to do moving forward. If you need help finding a CPA or a tax professional, you can log on to the IRS government website, and there is a search tool there for you.

 

ALEX ROCA: That's fantastic Dani. This was wonderful. Thank you for sharing. And I hope that you and the girls have a fabulous holiday season. Thank you so much for being with us.

 

DANI STADELMANN: Thanks for having me.

 

ALEX ROCA: Of course. And then last but certainly not least, I want to welcome Houng Do, vice president of Fidelity Charitable, to talk to us about charitable giving and paying it forward. Houng, thank you so much for joining us. I want to start with an overview of Fidelity Charitable. What is it? And is it accessible to everybody?

 

HUONG DO: Yes. Alex, and thank you so much for having me. This is one of my favorite topics to talk about even before it became my day job. So I'll explain Fidelity Charitable. It is an independent public 501(c)(3) charity. And yes, it's accessible to everyone. In fact, one of our mission statements is to make charitable giving more accessible, simple, and effective. And how we do that, is we support a type of account called a Donor Advised Fund, that allows you to give more tax efficiently.

 

And our particular donor advised fund, we call it the Giving Account. And we open our doors back in 1991. But since then, we now have grown to cover over 350,000 donors of all different sizes and shapes. We have supported over 400,000 different charities across the US. And over that span of time, we have granted out actually over $100 billion to various charities in the US. So it's been amazing work to be a part of it.

 

ALEX ROCA: Absolutely. And I am seeing some questions in the chat. Can you define what is a donor advised fund?

 

HUONG DO: Yes, I'm sure that would be helpful. So yes. A donor advised fund is essentially a charitable investment account. And sometimes you might hear the abbreviation D-A-F-F or DAFF for short. And the best way to think about it, I know we've talked about 529 plans and the tax advantages for college expenses that Vanessa and Dani talked about earlier, and IRAs for retirement. This is just another type of tax advantaged account, but it's only for charitable donations.

 

And the Donor Advised Fund works in three different parts. We call it our give, grow, grant story. So the give part is, you can qualify for an immediate tax deduction as soon as you deposit money into the account. And that can be cash, publicly traded investments, privately held investments as well. But it allows you to separate the timing of the actual tax deduction that you get and when the charity actually receives the money. There's no minimum to open the account. There's no minimum that you have to maintain.

 

And the grow part is, while you're deciding what charities you want to support, you can actually continue to potentially grow the assets for a larger gift down the road. And all of that growth within the account is tax-free for eventual gifts down the road. And then the grant part is, whenever the mood strikes you, you can recommend a grant to a public 501(c)(3) charity.

 

Now, if that term sounds unfamiliar and you're like, well, what counts as a 501(c)(3) charity? There are lots of different types, but the two most common that we come across are donations to a place of worship, donations to your favorite university for example. For some reason, people forget that those are technically charitable donations, but it can also be things like your local animal shelter, a nonprofit hospital. So there are a lot of things that fall into that 501(c)(3) category.

 

And if you're not quite sure who you want to donate to yet, we have tons of research tools available on our website, and you can use that to decide what causes that you do care about. And then on top of that, one of the cool features of a Donor Advised Fund, is you have the ability to donate anonymously.

 

Now, people get confused. Why would I not want the charity to know that the money is coming from me? And I always use this example. So I donate to my niece's fundraiser 10 years ago. I have moved three times since then, but they still find me every year to consider more donations with me. Now, that's a great example where, if you want to support a charity, maybe on a one-time basis, and you don't necessarily want to end up on a contact list, you can use that feature in a DAFF, where if you use your checkbook and credit card, there's absolutely no way to be anonymous.

 

ALEX ROCA: That is so interesting. And thank you for that call out you're able to do it anonymously. Can you only give cash as a charitable donation, or are there other types of assets that somebody can donate?

 

HUONG DO: Yeah, great question. So even though cash is definitely an acceptable contribution into a DAFF and it's probably the easiest option when it comes to donations, it's not necessarily the most tax efficient way that you can give back.

Because something you have to remember is, cash is money that we have already paid taxes on. So it has higher purchasing power than investments like let's say, a stock bond, mutual fund, ETF, or even privately held assets like private equity, private business interests, things like cryptocurrency. All these things have capital gains that are tied to them.

 

So from the time that you purchased until the time that you sell, whatever profits you have made up to that point would technically be taxed at the capital gains rate. But you can donate them to charity to potentially sidestep that capital gain bill. And the catch here is, that sometimes charities don't have the ability to accept all of these assets in. So that's where a donor advised fund can be really effective choice as the middleman between you and the nonprofit, where we can accept these kind of assets, we liquidate them, and the charity, will ultimately get the cash.

 

Now, aside from financial assets, you can also consider things like tangible goods, like your furniture, clothing, toys to various charities out there. It's going to really be based on need and what that charity is able to accept. So if you're thinking about what you want to donate, it's great to contact those organizations ahead of time and see what assets do they actually need at this time, and what will they actually accept.

 

But if resources are feeling a little bit light and you feel like, OK, I don't have resources I can give right now, but how can I help in other ways? You can also donate time. You can donate your skill sets. And what I mean by that is, for example, my background is in finance. So something that I do is, I take the things that I've learned over the past 20 years, and I actually helped two local nonprofits as a financial literacy instructor. So there are a lot of nonprofits out there that might have different gaps that you could fill with those skill sets.

 

Another friend of mine is another great example. His background is in IT. And during COVID, he took his skill sets. And he actually helped small businesses maintain an online presence, because he knew that's the only way that they could stay afloat during the pandemic. And small businesses create the most jobs in a lot of communities. So there are creative things that you can do like that, where you can take something that you're already good at and use that to benefit a cause that you care about.

 

And then on top of that, if you are volunteering or you're contributing dollars, don't forget to check your workplace benefits as well, because your employer might offer a charitable match for the money that you're donating, or they might also offer benefits on volunteer time as well because a lot of companies do.

 

ALEX ROCA: This has been absolutely wonderful. And I love that you brought on-- that you brought in time and effort, because sometimes that's all we can give, and that's more than enough. Personally, yours are much cooler. But I have started fostering kittens and I feel like that counts. That's my way to give back into the world.

 

HUONG DO: Hope that's counts, and it benefits you too.

 

ALEX ROCA: It is. It is mutually beneficial. Now, I want to bring up a fan favorite taxes. When thinking about charitable giving, is there a certain amount that someone needs to give to make a difference on their taxes?

 

HUONG DO: Yes, great question, and that's the topic that we all love to hate, taxes. When it comes to charitable giving, there are potentially two benefits that you can get. Now, I know taxes are not the primary reason we give back, but if we can support the causes you care about and save you tax dollars at the same time, it's just a win-win for everyone.

 

So the first one is a potential capital gain savings. And this one's pretty simple. All you really have to do is replace the cash donations that you have with some kind of appreciated asset that you've held more than a year. Because if normally, if you donate or sell those on your own, you would have a capital gain liability. But when you donate them and you own them more than a year, there's no tax liability to you, and there's also no tax liability to the charity either. So you can get this capital gain benefit even if you're not itemizing on your tax return.

 

Now, when some people say tax savings, what they might be referring to is ordinary income tax savings. And in order to get that on your tax return, you typically would need to itemize. And when you itemize, it's where you add all of your deductions together.

And if it happens to be more than the standard deduction, that's when you would have the ability to itemize.

 

So the itemizations that you can think about, you can look at all of the deductions available to you. Make sure you're keeping track of all your different tax receipts for your gifts throughout the year. Because sometimes we can't remember what we have for breakfast two days ago, much less the gift that we made in July. So it's really important to have those tax receipts.

 

But in addition to that, you would also want to look at potential other deductions like mortgage interest as an example. Property taxes-- did I buy a house? Were there any life events I had this year? Did I have another child this year? And looking at any possible deductions that are available to you.

 

And something that you might have heard about before is an acronym called SALT, which stands for State and Local Taxes. And that will include property taxes as well. That's an especially important deduction for this year. Because that new tax bill that got passed back in July, some people will actually have an increased amount in SALT that they can deduct for 2025. But when you add all of your deductions together, if they happen to be higher than the numbers that we show here on the screen, then that's when you would itemize on your tax return, and potentially get a higher federal income tax savings from that.

 

ALEX ROCA: That makes so much sense. Just to clarify though, can people claim everything they donate to charities or non-profit organizations or is there a limit?

 

HUONG DO: Yes, great question. So technically, the IRS will allow you to donate as much as you want to throughout the year, but they will put a cap on how much you can actually deduct on your tax return for that given tax year. So when you're donating cash directly to a public charity, the limit is 60% of your total adjusted gross income or AGI.

 

If you're doing a long-term appreciated assets as a donation, it's up to 30% of your AGI. If you're doing physical property, like the furniture and clothing we talked about earlier, you can do up to 50% of your AGI. Now, sometimes you may need an appraisal for some of these. But if it's in good condition and it's going to be less than-- I'm sorry, more than $500, you could get that without an appraisal.

 

Time, unfortunately, you can't deduct that. But if you're volunteering, you can deduct the cost of transportation, for example, the miles that it takes to get from where you are to the volunteering area. Now, for easy math to understand this, if your income is 100,000, if you donate all cash, you can deduct up to 60,000 that year. Appreciated assets 30,000. Property 50,000. If you're doing a combination of all of these things, then you're subject to that overall 50% AGI limit.

 

ALEX ROCA: Excellent. So on a similar note, is there a limit on how often someone can donate, or is there anything else that people should be thinking about when considering this as a gifting option?

 

HUONG DO: Yeah, great question. So there's not technically any kind of rule against how often you're doing these charitable donations. But if you're doing it outside of a donor advised fund, just remember that you do have to keep track of those tax receipts that I mentioned earlier. Now, I know I've reiterated that a couple of times, but the reason why is it's so easy to lose these things throughout the year, especially if you're doing small donations here and there.

 

So if you aren't using a donor advised fund, remember to track even the small donations, because they can add up, and keep it all in one place so that it's easier for you when it comes around tax time. With a donor advised fund, luckily you don't have to track every single grant. The only thing that you have to report to the IRS is the original contribution that you put into the account.

 

But one thing that I think is always forgotten at this time of year are deadlines. Because sometimes-- because we're never given a manual of how to handle these taxes, we forget about some of these provisions and we mix them up. So in order to get a tax deduction for this tax year, you always have to fund your donation by December 31. But occasionally, we have donors that mix this up with the IRA deadline where it says, hey, I can make my IRA contribution up until April 15 of the following year. Unfortunately, there is no retroactive application for charitable giving. So if you're past December 31, you will not be able to apply it for that previous tax year.

 

In addition to that, we have several changes that are going to happen because of that one big, beautiful tax bill. So starting in 2026, you'll actually have three different charitable changes. The first one is, if you don't itemize, you'll actually get an above the line deduction of up to 1,000 if you're single, 2000 if you're married filing jointly. And that's only to for cash donations to charity.

 

If you are itemizing on your tax return, there are two changes. The first one is the first 1/2% of your adjusted gross income, not deductible on your tax return, and that affects every tax bracket. And then if you're in the 37 top tax bracket, you have a 35% cap on all of your itemized deductions, including charitable giving. So sometimes people are using this and it's driving urgency for people to reconsider their strategy for 2025 versus future years. And that's where you'll want to have conversations, like Dani mentioned, with your tax person. Set up an appointment with your financial advisor and figure out how these things apply to your own personal situation.

 

ALEX ROCA: Thank you for that. Thank you Houng for helping all of us understand charitable giving a little bit better. And thank you to Vanessa and Dani. Again, you all provided invaluable information. And it was a pleasure chatting with all of you. We can't say this enough. Financial and charitable gifts can help leave a lasting legacy that can be far more meaningful than a physical item that could be forgotten or outgrown, to Dani's point, in two years.

 

And just a final reminder, to access help at any time, call us at the number on your screen. So if you have some other questions, give us a call and we can help you with that. If you haven't already, please use the QR code on the screen to register for our next event. We hope that you have an amazing holiday. Enjoy some relaxing time with your loved ones. And celebrate everything you accomplished this year as always.

 

Thank you for joining and have a great rest of your day.