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You can use the "Charity" field within the "Schedule A - Itemized Deductions" section to model gifting, as well as the "IRA Distributions" field to model Qualified Charitable Distributions (QCDs).
Charitable Giving - Itemized Deductions
For all charitable gifting with the exception of QCDs (discussed later), you'll enter those in the "Schedule A - Itemized Deductions" section of Scenario Analysis. That charitable giving is entered in the Charity Worksheet, which is accessible by clicking the pencil icon circled below.
Within the Charity Worksheet, there are several different fields to enter charitable gifts, depending on the nature of the asset being gifted and whether the organization you are giving to is a 50% limit organization or non-50% organization.
If you are unsure as to whether a charity is a 50% or non-50% limit organization, the IRS has a tax-exempt organization search tool with corresponding codes. Enter the charitable contribution in the appropriate field as seen in the example below.
NOTE: Donor Advised Funds (DAFs), by definition, are 50% limit organizations. Therefore, contributions to a DAF will be entered in one of the 50% limit organization fields below, depending on the nature of the asset(s) being gifted.
By entering the amount of the contribution in the appropriate box above, Holistiplan will automatically calculate the amount of the allowable deduction in a given year after accounting for any AGI (Adjusted Gross Income) limitations. Any unused deduction can be carried forward to future years for up to 5 years. In the example above and below, 30% of the AGI for this client was $34,365, so only that amount is allowable as a charitable deduction, with the remainder carrying forward to future tax years.
Charitable Carryforwards
If the allowable deduction for any entered charitable contributions are limited by AGI, Holistiplan will show those charitable carryforwards as seen below. As with other carryforwards in Holistiplan, those carryforwards are not automatically applied to future scenarios. Because scenarios are not required to be entered sequentially, automatically applying a carryforward to the next scenario entered may attribute those to the wrong tax year. You will need to account for any charitable carryforwards associated with each contribution type by manually combining them with any then-current-year charitable contributions for that same type.
In the example above, there is a $15,635 charitable carryforward that exists from 2024 into 2025 for "Capital Gains Donations to 50% Limit Organizations (30% AGI limit)." If another $30,000 of "Capital Gains Donations to 50% Limit Organizations (30% AGI limit)" contributions are made in 2025, you will need to combine the $15,635 carryforward from 2024 and that $30,000 current year (2025) contribution into one single $45,635 value for "Capital Gains Donations to 50% Limit Organizations (30% AGI limit)" in the 2025 version of the Charity Worksheet.
HOLISTITIP: To keep track of charitable carryforwards from specific years (remember they can only be carried forward 5 years), you may find organizing those carryovers by tax year using our Calculation Rows feature in Field Notes to be a helpful way to track carryovers from multiple years.
Qualified Charitable Distributions (QCDs)
Taxpayers who are over age 70.5 can direct charitable contributions to go directly from their IRAs to a recipient charity. Those taxpayers do not get a corresponding charitable deduction on Schedule A, but QCDs are excluded from taxable income.
TAX TIP: Since charitable deductions taken on Schedule A show up on line 12 of Form 1040, after line 11 (AGI), itemized deductions for charity do not reduce Adjusted Gross Income (AGI), and in turn, do not reduce any Modified Adjusted Gross Income (MAGI) calculated amounts used for other planning strategies.
QCDs may therefore have the effect of reducing otherwise taxable IRA distributions, if already being made, reducing AGI and MAGI, which can have positive implication for other planning strategies that depend on those MAGI thresholds.
To model QCDs within Holistiplan, access the IRA Distributions Worksheet by clicking on the pencil icon as shown below.
To model a QCD, enter the amount of the desired QCD in the "Taxpayer 1 and/or Taxpayer 2 Qualified Charitable Distributions" field outlined in purple below. Enter the remaining taxable portion of the IRA distribution in the "Taxpayer 1 and/or Taxpayer 2 IRA Distributions" field where outlined in blue below.
In the example above, a total of $50,000 IRA distributions were made for Taxpayer 1. Of those $50,000, $20,000 were made in the form of a QCD. The remaining $30,000 of that $50,000 total IRA distribution is taxable. Within the worksheet, you will see that $30,000, where circled in blue, is being counted as the taxable portion of IRA distributions to be used in the income tax calculation.
The savings on the QCD is also noted in the IRA Distribution Worksheet as well. The "Savings vs. Taking a Taxable Distribution Then Donating (With Itemized Deduction)" and "Savings vs. a Taxable Distribution (No Donation or Deductions) outline two alternatives to a QCD, one with an itemized charitable deduction and one without. In this case, the taxpayer is taking a standard deduction regardless, so the savings for those two alternatives are the same amount.
You will also see the taxable portion and QCD portions highlighted on the main Scenario Analysis screen as well, where outlined in green below.
If you have any questions about how to model charitable contributions for your client, please contact a member of our Support Team for assistance!