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How Do You Model Charitable Gifting Strategies in Scenario Analysis?

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 except 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.


SchACharityLine


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 a non-50% organization. 

If you are unsure whether a charity is a 50% or non-50% limit organization, the IRS offers 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 is 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. 

Click here for detailed instructions on how to model QCDs in Scenario Analysis! 



If you have any questions about how to model charitable contributions for your client, please contact a member of our Support Team for assistance!