3 Ways to Give to Charity
It’s Charitable Giving Season as the Holidays and the 2017 tax year come to an end. If you are thinking about making charitable donations, there are many options to consider, instead of cash, that may benefit you and your favorite charity.
With the increase in the stock market this year, many investors may have stocks that are highly appreciated. If you were to sell your stocks and give the cash to a charity, you would have to pay the capital gains taxes on the sales. Instead of selling, consider gifting the stock. When donating a stock to a charity, you can contribute the Fair Market Value of a stock that has been held for over one year and get a deduction (if you itemize). If the stock has been held for less than 1 year, the amount of the donation is the cost basis. Donations can be deducted up to 50% of your Adjusted Gross Income and depending on the type of charity (private vs. public) can be limited to 20%-30%. Please check with your accountant as to deductibility. You will usually need a letter of authorization or letter of intent to accompany the gift. Give us a call so we can help you analyze which stock will provide the charity and you the most bang for the buck.
If you have assets in an IRA and need to withdraw your Required Minimum Distribution (RMD), you can use your RMD to make a qualified charitable distribution. Up to $100,000 can be contributed from your RMD, benefiting the charity and saving you the tax responsibility which is your ordinary income rate.
If you want to make charitable donations, but haven’t decided on a specific charity, you could consider using a Donor Advised Fund. You donate your investments or cash into a donor advised fund and then make disbursements at a future date to the charitable organizations of your choice. You can continue to make contributions to the fund year after year. This gives you the opportunity to take a deduction now while you decide which charities to support.
Remember, all options may not be available to all investors. You should consult with us as well as your tax adviser to find the most beneficial solution for your individual situation.
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