End-Of-Year Giving Checklist: How to Stay Generous Without Surprising the IRS

Charitable giving often peaks in the final weeks of the year. Whether you're moved by the holiday spirit or eyeing tax deductions, this season is when generosity and tax planning intersect.

It pays to be strategic before you write that check or transfer those shares. A well-planned gift can benefit both you and the cause you care about. A poorly executed one can lead to tax complications, missed deductions, or even IRS penalties.

Here’s how to avoid the most common mistakes.

Confirm the Recipient’s Tax Status

Not all charitable organizations qualify for tax-deductible donations. If you're hoping for a deduction, give to a qualified organization.

Use the IRS Tax Exempt Organization Search to verify the nonprofit’s eligibility.

Religious organizations are generally considered qualified, even if they’re not listed. Political organizations and crowdfunding campaigns (like those on GoFundMe) typically are not.

Time Your Gift Correctly

For the donation to count in the current tax year, it must be completed by December 31. That doesn’t necessarily mean the charity has to deposit your check by that date, but the gift must be out of your control.

Here’s what counts:

• Checks mailed by December 31
• Credit card charges completed before midnight on December 31
• Stock or crypto transfers received by the charity’s brokerage before year-end
• Contributions to donor-advised funds made by December 31

The IRS is very literal on this point. A pledge to give doesn’t count. Neither does a check you write on December 31, but don't mail until January.

Use the Right Assets

Writing a check is easy, but it’s not always the most tax-efficient way to give. Here are other options that might deliver more benefits.

Appreciated Securities

If you own stocks, mutual funds, or ETFs that have increased in value and you’ve held them for more than a year, you may be better off donating appreciated securities instead of cash. You avoid paying capital gains tax and still get a deduction for the full fair market value.

Cryptocurrency

Donating crypto works similarly to donating appreciated securities. If held for over a year, you can deduct the full value and avoid capital gains. Ensure the charity is equipped to receive crypto or uses a donor-advised fund that accepts it.

IRA Assets

If you’re 70½ or older, you can make a qualified charitable distribution (QCD) directly from your IRA. For 2025, the annual QCD limit is $108,000 per person, indexed for inflation under the SECURE 2.0 Act. Married couples filing jointly can make QCDs up to this limit, for a combined maximum of $216,000.

A QCD can satisfy part or all of your required minimum distribution (RMD) and is excluded from your taxable income.

Document Every Donation

The IRS requires substantiation for charitable contributions. The rules vary depending on the amount and type of gift.

Cash Donations Under $250

A bank record (like a canceled check or credit card statement) or written receipt from the charity will suffice. The receipt should include the organization’s name, the date of the donation, and the amount.

Cash Donations Of $250 Or More

You must obtain a contemporaneous written acknowledgment from the charity. It must state the amount donated and whether you received any goods or services.

Non-Cash Donations Over $500

You must file IRS Form 8283. You'll also need a qualified appraisal if the value exceeds $5,000 (other than publicly traded securities).

Qualified Charitable Distributions

Your IRA custodian will send you a Form 1099-R showing the distribution, but it won’t be labeled as a QCD. You must tell your tax preparer or note on your return that part or all of the IRA distribution was a QCD. If you don’t, the IRS will treat the amount as taxable. Keep proof of the transfer from the IRA custodian to the qualified charity to substantiate the exclusion.

Watch Out for Contribution Limits

There are limits to how much you can deduct each year, based on your adjusted gross income (AGI). These limits apply only if you itemize deductions.

• Cash gifts to public charities: up to 60% of AGI
• Gifts of appreciated assets: up to 30% of AGI
• Gifts to donor-advised funds: up to 60% (cash) or 30% (securities)
• Carryforwards: If you give more than the limit, you can carry forward the unused portion for up to five years.

The One Big Beautiful Bill Act mandated new tax rules impacting charitable donations, which will take effect in 2026.

Only contributions exceeding 0.5 % of adjusted gross income (AGI) are deductible. For example, with $100,000 AGI, the first $500 in charitable giving is not deductible.

For high-income taxpayers, the deductible benefit is now capped at 35%, even if their marginal rate is higher, a reduction from 37%. This 35% cap limits the tax savings from a charitable deduction to the equivalent of being in a 35% bracket, even if your marginal rate is higher. It reduces the deduction’s value for those in the 37% bracket or above under current law.

If your AGI is high and you're making a large donation, especially non-cash assets, work with a tax advisor to structure your giving over multiple years if needed.

Maximize Donor-Advised Funds

Donor-advised funds (DAFs) can be especially effective for year-end giving. You receive the full deduction in the year you fund the DAF, even if you distribute the money to charities over future years.

This is helpful if you’ve had a spike in income, exercised stock options, or sold a business. You can “front-load” several years of donations into the fund, then make grants at your own pace.

DAFs also accept appreciated assets, making them a great way to give strategically while simplifying your tax reporting.

New Universal Deduction for Non-Itemizers

Starting in 2026, individuals who don’t itemize can take a charitable deduction of up to $1,000 for single filers and $2,000 for joint filers. Gifts to donor-advised funds, private foundations, or supporting organizations don’t qualify.

Be Cautious with Private Foundations

Private foundations offer more control than donor-advised funds but come with additional rules and administrative burdens.

They also have lower AGI deduction limits (30% for cash and 20% for securities) and require annual minimum distributions.

If you already have a private foundation, meet the 5% payout requirement by year-end to avoid penalties. If you're considering starting one, consider a DAF as a simpler alternative.

Consider Bunching Contributions

The standard deduction for the 2025 tax year (taxes filed in 2026) is $15,750 for single filers and $31,500 for married couples filing jointly. If your itemized deductions fall below that, you won’t receive any tax benefit for charitable giving.

One strategy is to “bunch” multiple years of charitable contributions into a single year to exceed the standard deduction threshold. You can do this directly or through a donor-advised fund. With the upcoming AGI floor and deduction cap, bunching donations into 2025 is even more strategic. It may be the last year to maximize the deduction benefit without new limitations.

Understand the OBBBA’s Potential Impact

The OBBBA increased the federal gift and estate tax exemption to $15 million per person starting in 2026, indexed for inflation from a 2025 base year.

This has significant implications for wealthy donors. If your estate will likely exceed the new exemption amount, now may be the time to combine charitable giving with broader wealth transfer strategies.

Consider gifting interests in a business, real estate, or qualified small business stock into charitable remainder trusts (CRTs) or charitable lead trusts (CLTs). These strategies can remove appreciating assets from your estate, reduce taxable income, and provide future or legacy gifts.

Charitably inclined families may also consider using donor-advised funds or private foundations in conjunction with trust planning. By aligning your philanthropy with the expanded exemption window, you may reduce future estate tax exposure while maximizing the tax efficiency of your giving.

Gifts made while the exemption is high will be grandfathered, even if future laws reduce it.

Don’t Forget State Rules

State tax laws often diverge from federal rules, and rules concerning deductibility and the availability of tax credits for qualified gifts to charity vary widely.

If you’re making large gifts, especially of appreciated property or through trusts, ask your advisor to confirm how your state will treat the deduction.

Giving Should Feel Good

Charitable giving can be deeply rewarding and financially smart. When you take time to understand the rules, use the right assets, and document everything correctly, your generosity can go farther.

You can start the new year knowing your giving made a real difference, without getting an unexpected letter from the IRS.

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