It Is Never Too Early to Begin Year-End Tax Planning

The end of 2022 is not as far off as it seems. Consider these smart ways to wrap up year on a financial high note. Not only can you save on your taxes, but you can also make a huge impact at Northwestern.

Sell depreciated assets and donate the cash. 2022 has not been good for all portfolios. If you would like to support Northwestern but your stocks or cryptocurrency have fallen in value, it is best to sell them first and then donate the cash. This allows you to record the loss as a tax deduction and qualify for an income tax deduction for the gift.

Timing: Complete all transfers and cash donations by December 31.

Open a donor-advised fund account. Contribute to a donor-advised fund—Northwestern offers Compass Funds—and enjoy a tax savings on that amount when you itemize.

Timing: Complete the contribution by December 31. You do not have to designate the funds this calendar year to receive the tax benefits.

Make a qualified charitable distribution of IRA assets. If you are 70½ or older, you can give any amount up to $100,000 per year from your IRA directly to Northwestern. You will not pay income taxes on the transfer. If you are required to take minimum distributions, you can use this transfer to satisfy all or part your obligation.

Timing: We must receive your gift by December 31 for your donation to qualify this year. If you have check-writing features on your IRA, please be aware that your check must clear your account by December 31 to count toward your required minimum distribution for the calendar year.

Help offset the tax liability on a retirement account withdrawal. If you are 59½ or older, you can take a distribution from your retirement plan account and then make a gift to Northwestern without an early withdrawal penalty. If you itemize your deductions, you can take a charitable deduction for the amount.

Timing: We must receive your gift by December 31 for your donation to qualify this year.

The Countdown Is On

Northwestern Gift Planning would be happy to assist you in your year-end planning. Please contact Northwestern Gift Planning at 800-826-6709 or giftplanning@northwestern.edu.