Charitable Clients Require Help in the Tax Season Period

Friday, March 25, 2016 Print Email

Many of the clients who use accounting firms in preparation of tax returns usually make charitable contributions. Most of them do so in a tax efficient way through direct donation of appreciated securities or by using donor –advised funding through which grants are made. Most of the clients however just write cheques or make their online donations using their credit cards. They fail to realize that there are other available means of increasing their ability of having a greater impact on charities and which are quite important to them in saving money and reducing their taxes. 

Just like attorneys and wealth advisors, CPAs have got the ability, particularly in the taxation season to recognize indications that clients could use in helping with charitable planning. Their advisors’ suggestions would be welcomed greatly by these clients that would in turn lead to expanded and deeper relationships with clients and other colleagues, family members and friends.

The following are some of the signs that show that clients could make use of the input and guidance from tax advisors:

i) Difficulty of clients in providing or compiling listing of charitable contributions that they usually make. They are not able to find tax-receipt letters from charities or do not remember if the contributions made were done by credit card, cheque or other means. Although the list provided by the client is complete, enquire if it was simple, frustrating or difficult for them to be put together.

ii) Clients making donations of assets that are not tax-efficient instead of donating assets or stock that should and could be donated.

iii) Clients making all their contribution in the last few weeks or days of December. Some of the year end donors do so for valid reasons since they only know at the close of the year what their income on annual basis should be or they have planned ahead and done their research and prefer making year end donations. However, others make hasty decisions just to have it done or give just in response to year end request donations. More progressive preparation will cause enhancement in donor pride and satisfaction as well as minimal pressure on wealth advisors in donating appreciated stock by the end of 31st December.

iv) Clients making donations to various charities on annual basis

Source: ReadyRatios

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