Year End Charitable Contributions

It’s almost the end of the year, so if you have some gifts you want to make, you need to make them before 12/31. That’s the deadline for you to get that tax deduction, which we’re all after. Remember that those tax deductions will only work if you itemize.

You can donate cash, personal items (clothes, furniture, etc.) or securities like stocks or bonds. Remember to get a receipt on any of those items. Most charities won’t value the personal items if you donate, so you’re going to have to come up with your own value. Be reasonable. Don’t get carried away, and the IRS probably won’t give you any problems.

You can donate stock, and most people don’t realize that maybe it’s better to donate stock or securities rather than the actual cash. You will only do that from taxable accounts, and you’re going to choose a stock that has a nice taxable gain in it. You’ve done well in the past, but you think that maybe you won’t do as well in the future with it—it’s kind of flattened out. Instead of selling the stock and giving the cash to the charity, give them the stock without selling it so you give away the gains, and you don’t have to pay tax on that. The value on the day that they receive that stock is the value of your donation. It’s a great way to do it. The receiving charity must have a brokerage account set up so that they can receive that. Most larger institutions do (larger churches, certainly our colleges). If you call their financial office, they will have someone there who can help you and give you all the information. Usually, it just takes a letter that you sign and send to your broker. They make sure it gets to the receiving broker and voila! You’ve made your gift by the end of the year. You get a nice tax deduction, and you don’t have tax to pay on those gains.

If you wait until January 1st, it’s going to be counting on next year’s return.

#investments #financialplan #financialadvisor #feeonlyfinancialadvisor #investmentadvisor #charitablecontributions

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