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Helping Clients Get the Most Out of Giving
How to maximize philanthropic impact and tax benefits simultaneously
Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
In today's newsletter, we're delving into the art of charitable giving, exploring how financial advisors can help clients maximize their impact while optimizing tax benefits.
From navigating deduction options to leveraging retirement accounts and innovative strategies like bunching donations, today’s Industry Chatter piece uncovers diverse approaches to making philanthropy both impactful and financially savvy.
Lastly, if you would like to be featured in our upcoming advisor spotlight editions, click here to send us an email.
INDUSTRY CHATTER
Feeling passionate about an issue can drive a person to support an organization in an array of ways, sometimes financially. Advisors can help clients find the best way to give charitably while maximizing tax benefits.
Two Types of Deductions
One of the first questions that comes up is whether or not a straightforward donation will result in a tax deduction. Take for example, a $200 donation from a bank account to a nonprofit.
The answer depends on whether or not the client takes the standard deduction. Taking the standard deduction is a move where taxpayers can reduce their income by a fixed amount. The other option for taxpayers is to itemize deductions, or record them individually. Currently, the standard deduction sits at $14,600 for single filers or $29,200 for those filing jointly in 2024.
If a client has a plethora of deductions adding up to more than the standard deduction, itemizing could be the way to go. In this case, the client could include the aforementioned donation within their itemized deductions as a charitable gift.
Retirement Funds
If going the standard deduction route, there are some savvy ways to give that could lower taxes additionally.
Retirees have the option to make donations from retirement accounts. For example, they could move funds directly from an IRA to a donate to a nonprofit.
If a retiree is at the age where they are required to take minimum distributions from their retirement accounts, this can satisfy that requirement while avoiding taxes on the distribution.
The Bunching Option
Experts can also look at consolidating donations for one large donation in a single calendar year.
A client could invest funds over several years, watch them grow, and then make a substantial donation.
Some clients enjoy the flexibility this option offers. The gift can be strategically donated in a year when a person’s income is higher, maximizing the value of the tax deduction.
Keep It Simple
Some individuals prefer to make giving as easy as possible. For this type of client, an advisor could recommend a donor-advised fund.
These types of funds offer an upfront tax deduction and then disperse the gifts over time, providing more options for when and where to gift funds. A client could also pool various assets into the donor-advised fund.
Seasoned advisors connect with their clients while guiding them through the twists and turns of their financial journey. Working with clients to strategically support organizations they are passionate about is a rewarding leg of the journey.
MARKET RECAP
It's been a quiet week in the markets, marked by a dearth of major economic news and a consistent flow of positive indicators from the first-quarter earnings season.
As of May 7, 424 companies in the S&P 500 have disclosed their earnings, with 78% surpassing earnings expectations and 61% exceeding revenue forecasts.
The S&P 500 continued its upward trend, marking its third consecutive week of gains and nearly recouping losses from April, while the Dow Jones boasted eight consecutive sessions in the green.
Notably, the utilities sector, as tracked by the Utilities Select Sector SPDR Fund, has emerged as the star performer of 2024, outstripping energy and doubling the tech sector’s performance, with some analysts attributing the outperformance to heightened power demand from data centers.
Concerns surfaced regarding a potential job market slowdown following unexpectedly high weekly jobless claims. The figure reached its highest level in eight months.
The University of Michigan's Consumer Sentiment report revealed a sharper-than-expected dip in May, along with a worrying rise in inflation expectations.
Investors are now fully factoring in two interest rate cuts by year-end, beginning in September.
Attention now turns to the forthcoming April Consumer Price Index inflation report on Wednesday and Federal Reserve Chair Jerome Powell‘s remarks in Amsterdam on Tuesday.
Buffett Sells Apple Shares
Warren Buffett‘s Berkshire Hathaway Inc. has cut its stake in Apple Inc. by 18%, signaling waning confidence as the tech giant faces challenges in its Chinese market.
Apple’s M4 iPads
Meanwhile, Apple unveiled an iPad Pro with a M4 chip and OLED display, and an iPad Air with a M2 chip, enhancing the iPad lineup for the first time since 2022. The iPad Pro starts at $999 for the 11-inch model and $1,299 for the 13-inch model — higher price points than older releases.
Tesla Cuts Jobs
Tesla Inc. has initiated another round of job cuts in China due to intensifying competition in the electric vehicle market, which is increasingly dominated by local rivals.
Pfizer Settles Lawsuits
Pfizer Inc. has agreed to settle over 10,000 lawsuits related to cancer risks associated with its discontinued heartburn medication Zantac.
Nvidia Leads AI
Nvidia Corp. has been declared the de facto standard in AI technology by a Goldman Sachs analyst, who said the company will dominate the sector for the foreseeable future.
WHAT THE PROS ARE WATCHING
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Our platform empowers you to monitor big moves in real-time, allowing you to react swiftly to market shifts and keep your clients informed and confident in your expertise. Whether you're tracking specific stocks, sectors, or market indices, Benzinga Pro provides the tools you need to stay informed and proactive in managing your clients' portfolios.
Say goodbye to manual tracking and hello to efficiency with Benzinga Pro's intuitive interface and customizable features. Join thousands of financial advisors who rely on Benzinga Pro to enhance their advisory services and drive better outcomes for their clients.
THE WEEK AHEAD
Economic Data
Monday: Fed Vice Chair Philip Jefferson and Cleveland Fed President Loretta Mester speak
Tuesday: Producer price index, Fed Chair Jerome Powell speaks
Wednesday: Consumer price index, U.S. retail sales, Empire State manufacturing survey, Home builder confidence index
Thursday: Initial jobless claims, Building permits, Import price index, Fed Vice Chair for Supervision Michael Barr testifies
Friday: U.S. leading economic indicators, Fed Governor Christopher Waller speaks
Earnings
Monday: Lithium Americas Corp, Avita Medical, Bank of America
Tuesday: 10X Genomics, Reit 1 Ltd, 3M
Wednesday: 3D Systems, Phillips 66, Allianz SE
Thursday: AT&T, Deutsche Bank, O’Reilly Automotive, Arrowhead Pharmaceuticals
Friday: Boeing, Western Union, RBC Bearings, Alliant Energy Corp
Click here for the full calendar of economic data and earnings reports.
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