End of year charitable gift reminder

[headoverheels 291]

 

For those of you who itemize tax deductions, gifts of appreciated assets such as stocks are particularly advantageous.   For example, I have stock which is worth 8x what I paid for it.   I can donate some shares directly to a qualifying agency, and deduct the appreciated amount on Schedule A.  e.g., if I donate stock that I paid $250 for, I can deduct the current value of $2000 on the itemized list, never having paid tax on $1750 of gains.

Even if you take the standard deduction, this is still advantageous.  If I were to sell the stock and then donate cash, I would have to pay taxes on the gain, thus reducing available funds to donate.  It would also increase taxes on my wife's Social Security income.

Most large and middle sized charities are probably set up to received stock gifts.    My local food bank, where more than half of my giving went this year, is not set up for such.

It will take a few days (or more) to process though the system, so do it now if you want it to fall into tax year 2020.

I wish that this had occurred to me when I still had income, before I retired.  Now, I don't much pay income taxes anyway.

[billvon 2,400]

1 hour ago, headoverheels said:

For those of you who itemize tax deductions, gifts of appreciated assets such as stocks are particularly advantageous. 

Great reminder and I would also add:

If you have enough of a stock account to consider this, I would recommend people also look into a charitable gift fund.  Several companies, like Fidelity, do this.  You create the account then transfer appreciated stock into it.  As soon as you do that you get the deduction equal to that day's value of the stock.  THEN you can invest within the charitable gift fund and grow the money you donated.  You can no longer withdraw it, but you can (at any time) give them instructions and tell them what to do with it, and they will then sell shares and transfer the cash to any qualified charity you want, even if it's tiny and would be confused by a donation of appreciated stock.

It saves on taxes three ways.  One, it's a charitable gift and you can deduct the amount you contribute.  Two, you don't pay any capital gains on the stock - even though within the fund you can sell it and reinvest it.  Three, you never pay any money on the interest or returns you see within the fund.  It also enlarges the number of charities you can donate to.

So if you have a bunch of stock you want to contribute, and you want the deduction this year, but haven't decided what to do with it yet - this might be a good way to go.

[billeisele 122]

16 hours ago, billvon said:

Great reminder and I would also add:

If you have enough of a stock account to consider this, I would recommend people also look into a charitable gift fund.  Several companies, like Fidelity, do this.  You create the account then transfer appreciated stock into it.  As soon as you do that you get the deduction equal to that day's value of the stock.  THEN you can invest within the charitable gift fund and grow the money you donated.  You can no longer withdraw it, but you can (at any time) give them instructions and tell them what to do with it, and they will then sell shares and transfer the cash to any qualified charity you want, even if it's tiny and would be confused by a donation of appreciated stock.

It saves on taxes three ways.  One, it's a charitable gift and you can deduct the amount you contribute.  Two, you don't pay any capital gains on the stock - even though within the fund you can sell it and reinvest it.  Three, you never pay any money on the interest or returns you see within the fund.  It also enlarges the number of charities you can donate to.

So if you have a bunch of stock you want to contribute, and you want the deduction this year, but haven't decided what to do with it yet - this might be a good way to go.

Great info. I'm with Fidelity and will use this. Thanks.