The giving season is an opportunity to focus on the people and causes that mean the most to you and your family. (UBS)

Here are a few strategies that you may want to discuss with your financial advisor and your tax advisor. Please also refer to the UBS Wealth Way: 2023 Tax fact sheet for more information.


1. Give to your future self

Before giving to others, make sure that you are on track for meeting all of your own savings goals. Please check out our Savings waterfall worksheet to make the most of your savings dollars, and to make sure that you and your spouse are taking full advantage of all of your contribution options (and any match that your employer may offer).


2. Put stocks in stockings

Giving investments to your family can be a great way to help introduce children to investing, providing a concrete example of the power of compounding growth that can help encourage them to adopt a long-term growth mindset.


Giving appreciated stocks also allows you to give more than you could after realizing capital gains taxes, and may also give you a way to trim concentrated positions and reduce your unrealized capital gains taxes. In most cases, young children will have an opportunity to realize those capital gains at a lower tax rate—possibly a 0% tax rate, if their taxable income falls into that bracket when they sell— increasing your family's overall after-tax wealth.


If you want to gift appreciated securities without also passing along the tax obligation, you may prefer to use a grantor trust. In this case, you will remain responsible for the trust's income taxes. When structured correctly, either strategy can allow you to reduce your future estate tax liability.


3. The gift of education

529 college savings plans have a special feature—known as accelerated gifting, or “front-loading”—that allows a family to contribute more than the annual exclusion amount by filing a gift tax return and electing to have the contribution treated as being made over a five-year period. Front-loading can help to remove the dollars—along with their future growth—out of the contributor's taxable estate and into the beneficiary's account, where growth will be tax deferred (and tax-free, as long as the funds are used for qualified educational costs or converted to a Roth IRA).¹


In 2023, a married couple filing jointly can use front-loading to contribute up to USD 170,000 (5 years of annual USD 17,000 exclusions for each spouse) to the 529 account of any beneficiary without incurring a federal gift tax. This can be done for multiple 529 plans, assuming that each has a different beneficiary and other gifts haven't already been made for this tax year. For more information on 529 giving, including the new SECURE 2.0 Act provision that allows for a potential 529-to-Roth conversion, please see How to get the most out of your 529 plan .


4. “Brady bunch” your donations

The 2023 standard deduction is USD 13,850 for single filers and USD 27,700 for married couples filing jointly, and many itemized deductions were eliminated in the 2017 Tax Cuts and Jobs Act, which helps to explain why roughly 9 out of 10 taxpayers file using the standard deduction. With this in mind, you may want to “Brady bunch” several years of charitable gifts into a single year to make itemizing your taxes worthwhile and retain the tax benefits of charitable gifting.


If you'd like to make a very large donation this year in order to reduce your taxes, but you would like to stretch your charitable donations over more years rather than make a big one-time gift, you may want to consider using a Donor Advised Fund (DAF) or a private foundation.


Please see Charitable giving: the rules of the road , an excellent guide to effective charitable giving strategies written by our esteemed colleagues in the UBS Advanced Planning Group, Family Office Solutions, and Family Advisory and Philanthropy Services teams.


5. Use QCDs to donate efficiently

Qualified charitable distributions (QCDs) are another way that you can give to charities on a tax-efficient basis. If you need to make a Required Minimum Distribution from your IRA (generally limited to traditional and inherited traditional IRAs) and you are at least age 70½, you and your spouse may each donate up to USD 100,000 from your respective IRAs to one or more charitable organizations. QCDs will count toward your RMD, and it won't be subject to federal income tax, but this gift must be made directly from an IRA to the charitable organization, and it must be completed by year-end.²



See the full report, Give to others, not the IRS , 25 September, 2023.


¹ - IRC § 529(c)(2)(B). It is necessary to file a gift tax return to claim this treatment. The accelerated gifting election is made on IRS Form 709, and filed with your federal tax return, in the first year the accelerated gift is given. You cannot use the annual exclusion for gifts to this individual before the end of five calendar years, but subsequent rounds (i.e., every five years) of accelerated gifting are permitted. If a donor elects to have a 529 contribution treated as made over a five-year period, and then dies during that five-year period, a portion of the gift will be subject to the estate tax. IRC § 529(c)(4)(C).


² - It's important to note that you cannot make a QCD to a donor advised fund or a private foundation. For more information on QCDs, please see Beyond RMDs: 3 Strategies to improve your after-tax wealth potential.