Helping Your Charitable Contribution Go Further12/07/2018 by Maggie Mau
In addition to getting a warm and fuzzy feeling from making a gift to your favorite charity around the holidays, there are tax benefits as well.
Please note: the following information should not be used as a substitute for advice from your financial advisor or tax advisor. Please consult your advisor(s) when making charitable giving decisions, to maximize your deductions and to fit your personal giving needs.
Gifts of Stock
One of the most tax-efficient ways to give to charity is by donating long-term appreciated securities, or any stocks, bonds or mutual funds that have significantly appreciated in value over time.
If you’ve owned appreciated securities with unrealized gains for more than a year, you can donate them directly to the qualified charity of your choice and take a charitable deduction equivalent to the fair market value of the assets on the day you donated them. The best part? You don’t need to pay capital gains tax on the securities. Contact Maggie Mau to make a gift of stock today!
Qualified Charitable Distribution (QCD) from your Individual IRA
If you are at least 70 ½, your Individual Retirement Account (IRA) may be the way to make your gift this year! A Qualified Charitable Distribution (QCD) is when you direct money from your IRA, directly to a qualified charity (hint: Bridging is one). The best part about this is that you can do this, tax-free, up to $100,000. Plus, any money that you transfer as a QCD reduces the amount you must take in Required Minimum Distributions (RMD) once you hit 70 ½. This is beneficial because any amount taken as an RMD is realized as income on your tax return. Making a QCD can help reduce your taxable income.
Bundling/ Bunching/Concentrating Gifts
Whatever you choose to call it, bundling or bunching your gifts just may be the new popular way to make an impact, while still making a gift that works for you. With the new standard deduction changing to $12,000 for individuals and $24,000 for couples, one way to receive a tax benefit for your charitable giving is to bundle your gifts in one year (to get higher than the new standard deduction) and take a larger tax deduction in that year.
A popular way to do this is to create a donor advised fund. In the first year, you can make a larger donation to the donor advised fund in order to get above the standard deduction, to realize the tax benefits. Then, you are able to continue your regular annual level of support to your charity of choice by making annual distributions from this fund in subsequent years.
Added bonus: while you’re waiting to disburse your donation in subsequent years, you can invest the gift, potentially allowing it to grow tax free and increase the amount of your donation down the road!
However you choose to give, please know that because of you, we are able to provide beds, blankets, dishes, and much more to nearly 300 people every week. Thank you for FURNISHING HOMES WITH HOPE.