The final weeks of the year are a natural time to support charities and help family members. They are also an important time to review how each gift should be made. The recipient, the type of asset, the amount, and the completion date can all affect the tax result.
A gift should always begin with your personal goals and available cash flow. Once those priorities are clear, thoughtful planning can help you avoid missed deductions, unnecessary tax filings, or transfers that do not fit your broader estate and financial plan.
Review the 2026 Charitable Deduction Rules
For 2026, taxpayers who do not itemize may be able to deduct up to $1,000 of qualifying cash contributions, or up to $2,000 for married couples filing jointly. The deduction applies only to qualifying cash gifts made to eligible organizations, and certain contributions, including gifts to donor-advised funds, do not qualify for this non-itemizer deduction.
Taxpayers who itemize should also account for the new charitable deduction floor. In general, only total charitable contributions above 0.5 percent of adjusted gross income are deductible for 2026. Contributions remain subject to other applicable limits, including percentage-of-income limits and, for certain higher-income taxpayers, limitations affecting itemized deductions. This makes it especially useful to estimate income and itemized deductions before deciding whether to make a larger gift this year or coordinate several years of giving.
Choose the Right Asset and Giving Method
Writing a check is simple, but it may not always be the most tax-efficient approach. Donating appreciated publicly traded securities held for more than one year may allow an eligible donor to avoid recognizing capital gain while potentially claiming a charitable deduction based on fair market value. The deduction depends on the type of charity, applicable adjusted-gross-income limits, and other requirements; securities held for one year or less generally receive different deduction treatment. A donor-advised fund may also help families organize several charitable gifts, although the tax treatment depends on the contribution and the deduction being claimed.
Individuals age 70½ or older may want to discuss a qualified charitable distribution (QCD) from an IRA. For 2026, up to $111,000 may generally be transferred directly from an IRA to an eligible charity. A QCD cannot be made to a donor-advised fund. A qualifying transfer is not claimed as a charitable deduction, but it may be excluded from taxable income and can count toward a required minimum distribution. The payment must follow the QCD rules and should be started early enough for the custodian and charity to complete it before year-end.
Plan Family Gifts Carefully
The federal annual gift tax exclusion is $19,000 per recipient for 2026. A married couple may generally give up to $38,000 to the same recipient when each spouse uses an annual exclusion. If each spouse makes a separate qualifying gift within that spouse’s exclusion, a gift tax return may not be necessary; electing to split a gift made by one spouse generally requires a Form 709 filing even when no gift tax is due. Gifts above the annual exclusion do not automatically create an immediate tax bill, but they may require a federal gift tax return and reduce the donor’s available lifetime gift and estate tax exclusion.
If the goal is to help with tuition or medical costs, a direct payment to the qualifying educational institution or medical provider may fall outside the annual exclusion. The payment must generally be made directly to the school or provider. Giving the money to the family member first may not receive the same treatment.
Before transferring stock, real estate, business interests, or other appreciated property, consider both the gift tax rules and the recipient’s future income tax basis. A lifetime gift can produce a different capital gains result than an inheritance, so the tax savings today should be compared with the possible tax cost later.
Complete the Gift and Keep the Documentation
A year-end intention is not enough. Make sure the charity or recipient receives the gift by the applicable deadline and allow extra time for securities, account transfers, appraisals, or custodian processing. Keep receipts, acknowledgment letters, account statements, appraisals, and proof of payment. Noncash gifts over certain amounts may require Form 8283 and, in some cases, a qualified appraisal.
TKG Tax & Accounting can help review how a proposed charitable contribution or family gift may affect your 2026 tax return, filing requirements, and year-end tax projection.
For families who want to coordinate charitable giving, family gifts, investments, retirement assets, and estate planning goals, schedule a meeting with Gary S. Mannuzza Jr., CFP®, of our affiliate TKG Wealth Advisers, who can help evaluate those decisions within a broader financial plan. Contact TKG Tax & Accounting at (848) 235-5405 today.
This article is for general informational purposes and is not legal, tax, or investment advice. Estate planning documents should be prepared or reviewed by a qualified attorney, and individual tax and financial decisions should be evaluated based on your specific circumstances.
TKG Wealth Advisers is a New Jersey registered investment advisory under common control with TKG Tax & Accounting. TKG Wealth Advisers does not serve as an attorney, accountant, or insurance agent and does not prepare legal documents or tax returns.
