A hit or a miss? Tips for reflecting on tax season

Regret is a nearly universal human emotion. Some of the most common regrets are “regrets of omission.” Indeed, wishing you’d done something is far more likely than wishing you hadn’t done something.

Keep this in mind as you debrief tax season with your clients. Many people experience regret after filing their tax returns when they realize they could have given more to charity, both for personal fulfillment and for potential tax benefits. Of course, charitable donations can reduce taxable income if properly documented and if your client itemizes deductions rather than taking the standard deduction. However, many filers only recognize the full impact of these deductions after seeing their final tax bill, wishing they had allocated more of their resources to causes they care about instead of paying more in taxes.

As attorneys, CPAs, and financial advisors, you play an important role in helping prevent this type of regret by working with clients throughout the year on their charitable giving plans. When philanthropy is left to the last minute, there’s often simply not time for a client to thoughtfully consider the opportunities. Whether a client is making gifts of stock to a donor-advised fund, is over 70 ½ and considering a Qualified Charitable Distribution from an IRA, or anything in between, proactive planning is very helpful.

Of course, even beyond the financial benefits of a tax deduction, regret can also stem from missed opportunities to make a positive difference in the lives of others. Research shows that people frequently look back and wish they had shown more kindness or generosity, especially when they see the tangible impact their support could have had on those in need. The aftermath of tax season serves as a reminder of the good that could have been done.

Sometimes what stands in the way of charitable giving is that there are too many choices. A client may feel paralyzed, and maybe you do too! Not only are there hundreds of charities in our community, but also the tools for giving are wide-ranging and many are complex. That’s why the Foundation is honored to be your first call whenever you’re discussing charitable giving with a client, whether before or after tax season. All year round, the Community Foundation is here to help your clients learn more about how to address critical community needs and the various charitable giving vehicles that will enable them to do so. We’ll help develop a plan that maximizes not only the client’s charitable goals, but also the client’s financial goals.

We look forward to hearing from you!