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Unpopular opinion: Thanksgiving is my favorite holiday, maybe because it’s the season that naturally invites us to reflect with intention. The pace slows just enough for us to breathe, gather, and reflect on what, and who, truly matters.

For me, this season always brings gratitude to the surface:

• Gratitude for my family, especially watching my boys grow into their personalities.
• Gratitude for my clients and the privilege of being trusted with their goals, fears, and dreams.
• Gratitude for the opportunity to teach and help shape the next generation of financial planners at Texas A&M University.
• And gratitude for the colleagues I’ve met along the way, people who have encouraged me, challenged me, and walked alongside me through this past year.

It’s a blessing to do meaningful work every day, to sit across from people I care about and help them make decisions rooted in clarity and purpose.

The Meaning of Giving

As we head into Thanksgiving, many families start thinking about generosity, not only the emotional kind, but also the financial kind.

And while giving is always from the heart, there are smarter, more efficient ways to give. The goal is simple:

Give joyfully. Give purposefully. Give in ways that strengthen your financial picture, not strain it.

Here are some (but not all) of the most effective charitable and familial giving strategies to consider before December 31st.

Smart Year-End Giving Strategies

1. Qualified Charitable Distributions (QCDs): A Powerful Tool for Retirees

For IRA owners age 70½ or older, a QCD allows you to give up to $108,000 (2025) directly to a qualified charity.

Why QCDs are so effective:

• They satisfy your Required Minimum Distribution (RMD)
• They are excluded from taxable income
• They help reduce Medicare IRMAA surcharges, taxable Social Security, and exposure to the Net Investment Income Tax (NIIT)

Example: If you donate $5,000 annually to your church, rather than donating from after-tax dollars, doing it through a QCD means that $5,000 never hits your taxable income, reducing taxes and preventing the “ripple effects” that higher AGI can trigger.

QCDs are one of the few strategies that reduce AGI directly, and AGI is the driver behind many hidden taxes.

2. Donating Appreciated Stock Instead of Cash

Giving cash is the norm. Giving appreciated stock is the planning power move.

When you donate stock held more than one year:

• You may deduct the full fair market value
• You avoid paying capital gains tax entirely
• You may reduce NIIT exposure
• The charity receives the full value
• You preserve your cash for goals, rebalancing, or other needs

Example: You bought $2,500 of stock years ago and it’s now worth $10,000. If you donate the shares, you may deduct the $10,000 value, the $7,500 gain disappears, the charity receives more, and you protect yourself from future capital gains taxes and NIIT impact.

This is ideal for high-income earners, investors with concentrated positions, or anyone with low-basis stock.

Now let’s run through this scenario if we sold the stock first and then donated the proceeds.

Step 1: Sell the stock. Gain = $10,000 – $2,500 basis = $7,500 gain. Capital gains tax: $7,500 × 18.8% = $1,410. (Long-term capital gains rate 15% + NIIT 3.8% = 18.8% total potential rate.)

Step 2: Donate the after-tax cash. Cash available to donate = $10,000 – $1,410 = $8,590.

Step 3: Deduction depends on donation amount. You now only get a deduction for what you actually donate: $8,590. In 2025, cash charitable gifts to qualified public charities can be deducted up to 60% of your AGI, but only if you itemize rather than take the standard deduction.

Net Result

• ✔ Tax deduction: $8,590
• ✘ Taxes paid: $1,410
• ✔ Charity receives: $8,590
• ✘ You lose $1,410 unnecessarily
• ✘ Your AGI increases from the realized gain, which may increase NIIT, IRMAA, or taxable Social Security

Let’s compare them side by side:

Key Takeaway: Donating appreciated assets removes the gain and maximizes your deduction. Selling first typically shrinks both the gift and the tax benefit.

Bottom line: If you were planning to donate cash, it may be worth revisiting whether appreciated stock is smarter.

3. Use vs. Non-Use Gifts: Choosing the Right Charity for Non-Cash Donations

When donating non-cash property (art, collectibles, antiques, etc.), the IRS distinguishes between two types of gifts.

Use Gift. A “use gift” is something the charity can directly use in its mission. Example: donating a painting to an art museum that will display it and use it for their charitable purpose. Tax outcome: you may deduct the fair market value of the artwork.

Non-Use Gift. A “non-use gift” is given to a charity that won’t use the property in its mission, but will sell it. Example: donating that same painting to the Humane Society, which cannot use the art for program services and would likely sell it. Tax outcome: your deduction may be limited to your cost basis, not its current value.

Why this matters: the same item, given to two different charities, can have very different tax results. This matters most with artwork, collectibles, antiques, jewelry, memorabilia, and any highly appreciated personal property.

Thoughtful matching means larger impact plus a better deduction.

4. Clarifying Two Common Family-Gift Questions

Families often confuse tax rules around helping loved ones. Here are two important distinctions.

Direct payments for tuition or medical bills are NOT gifts. When you pay tuition directly to a school or medical bills directly to a provider, it does not count as a gift, it does not use your annual exclusion, and you can pay an unlimited amount tax-free. This can be incredibly helpful for parents and grandparents wanting to support loved ones without affecting their estate plan.

Gift Splitting for Married Couples. Married couples can elect to “split” a gift, meaning a gift from one spouse is treated as coming equally from both.

• Annual exclusion: $19,000 per person (2025)
• With gift splitting: $38,000 per person
• Requires filing Form 709 to make the election

This is great for helping adult children, funding 529 plans, supporting grandchildren, and making meaningful gifts while staying under annual exclusion limits.

A Real-World Example: Avoiding Gift Tax Surprises. Generosity is wonderful, but without planning, it can unintentionally create tax consequences. This is the perfect time of year to “layer” gifts that may be completed through gift splitting in 2025 and, if the amount is still short, may still be completed in 2026.

A client recently called, eager to surprise his daughter by paying off her mortgage for Christmas. A beautiful gesture. We celebrated, until I had to play the financial planner and pause the celebration. Cutting a $98,000 check in December sounds simple, but it could trigger an unexpected gift tax headache.

Here’s how we made it strategic. He and his wife can each gift $19,000 to their daughter and $19,000 to their son-in-law in 2025, for $76,000 total. In early 2026, they can gift the remaining $22,000, with no gift tax return and no lifetime exemption used.

A thoughtful gift deserves thoughtful planning. Without it, the IRS could end up being the real Grinch this season. This simple sequencing saved them from needing to file a Form 709 and preserved every dollar of their lifetime exemption.

5. Don’t Forget the 5-Year Charitable Carryforward

Sometimes our generosity exceeds what the IRS allows us to deduct in a single year. Enter the 5-year carryforward rule. If your charitable gifts exceed the AGI limits for deductions (up to 60% of AGI for cash, up to 30% of AGI for appreciated assets), you can carry forward unused deductions for up to five additional years.

This is helpful for large year-end gifts, DAF contributions, years with unusually high income, bonus years, and business-sale years.

6. Don’t Forget About Donor-Advised Funds (DAFs)

As we get closer to year-end, one of the most flexible, and often overlooked, charitable planning tools is the Donor-Advised Fund (DAF). A DAF allows you to make a charitable contribution now, receive an immediate tax deduction, and then recommend grants to charities over time. This is especially helpful when you’re unsure which charities you want to support yet, or when you’re saving toward a larger, legacy-style gift.

Why DAFs are so powerful:

• Immediate deduction. You receive a charitable deduction in the year you contribute to the DAF, even if the money isn’t distributed to charities until later.
• Give when it’s tax-efficient, distribute when it’s meaningful. This is perfect for years with unusually high income, bonuses, business sales, or large stock vesting.
• Ideal for appreciated stock. You can contribute appreciated securities directly to the DAF: deduct the fair market value, avoid capital gains, and the assets can be invested and grow tax-free inside the DAF.
• Consolidates your giving. One receipt, one contribution, many charities. This simplifies your tax filing and creates a structured way to plan gifting.
• Great for families that want to teach generosity. You can involve children in selecting charities and setting giving goals. It becomes both a planning tool and a legacy tool.

When a DAF Makes Sense. A DAF can be especially valuable if you want to “bunch” deductions to exceed the standard deduction, you have highly appreciated stock you’d like to gift, you want a steady charitable budget each year, you want to avoid the administrative burden of a private foundation, you’re unsure which charities you want to support right now, or you’d like to build a long-term giving strategy for your family.

Example: Bunching With a DAF. Let’s say a family normally gives $5,000 per year to charity, not enough to itemize. But in 2025 they receive a large bonus. They could contribute $20,000 to a DAF in 2025, itemize that year and take the deduction up to AGI limits, then distribute $5,000 per year to charities for the next four years. The charity still gets the same amount, but the family receives a much larger tax benefit.

In short: a DAF lets you be generous on your terms, in the timeline that feels right, while maximizing the tax impact of your gift.

Giving With Your Head, Your Heart, and a Plan

The most meaningful giving happens when your heart leads, your head ensures efficiency, and your plan ensures you stay on track.

Generosity is powerful, and planning amplifies it. For how these same giving strategies surface when you review your tax return, see the companion post: Now That the Return Is Filed: What to Do with What You Found.

From My Kitchen to Yours: My Gooey Butter Cake

No November blog would be complete without sharing the recipe that has earned a permanent place at our holiday table.

Wishing You a Beautiful Thanksgiving Season

This month, my hope is that your home is full of warmth, gratitude, and moments that remind you of the good in your life. I am deeply thankful for you, my clients, students, readers, and the community that has welcomed me so wholeheartedly.

Year-end planning can feel overwhelming, but it doesn’t have to be. I’m here to walk through the options with you.

Here’s to a season filled with gratitude, generosity, and grace. It’s an honor to be part of your financial journey.

Frequently Asked Questions

What is a Qualified Charitable Distribution (QCD)?

For IRA owners age 70½ or older, a QCD allows you to give up to $108,000 (2025) directly to a qualified charity. It satisfies your Required Minimum Distribution, is excluded from your taxable income, and helps reduce Medicare IRMAA surcharges, taxable Social Security, and Net Investment Income Tax exposure by lowering your AGI directly.

Is it better to donate cash or appreciated stock?

For stock held more than one year, donating the shares directly is usually more efficient than selling first and donating cash. You may deduct the full fair market value, you avoid capital gains tax entirely, and the charity receives the full value. Selling first typically shrinks both the gift and the tax benefit and can raise your AGI.

What is a donor-advised fund (DAF)?

A DAF lets you make a charitable contribution now, receive an immediate tax deduction, and then recommend grants to charities over time. It is especially useful for bunching deductions in a high-income year, donating appreciated stock, and building a long-term family giving strategy without the burden of a private foundation.

Do gifts for tuition or medical bills count toward the gift tax exclusion?

No. When you pay tuition directly to a school or medical bills directly to a provider, it does not count as a gift and does not use your annual exclusion. You can pay an unlimited amount tax-free, which can be a powerful way for parents and grandparents to help loved ones.

What is gift splitting for married couples?

Gift splitting lets a married couple treat a gift from one spouse as coming equally from both. That effectively doubles the annual exclusion from $19,000 to $38,000 per recipient in 2025. It requires filing Form 709 to make the election, and it is useful for helping adult children, funding 529 plans, and supporting grandchildren.

Disclosure

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for individualized tax or legal advice. Please consult your tax advisor and attorney regarding your specific situation.