Marin Advocates for Children welcomes and deeply appreciates the generosity of so many and the many forms it comes in. We encourage supporters to consider a gift of stock.
Here are four things to know about giving stock to charity to get the maximum tax break.
- Giving appreciated stock you’ve held for more than a year is better than giving cash. If you donate stock that has increased in value since you bought it more than a year ago – and if you itemize deductions -- you can take a charitable deduction for the stock’s fair market value on the day you give it away. You’ll also avoid capital-gains taxes on the increase in value over time, which you would have had to pay if you sold the stock then gave the charity the cash proceeds. You can deduct the fair market value only if you hold the stock for more than a year before giving it away. If you’ve held it for less than a year, your deduction is limited to your cost basis -- what you paid for the stock -- not the current value.
- If it’s a losing stock, it’s better to sell it and give the cash. If the stock has lost value, it’s better to sell the stock first and give the cash to the charity. You’ll still be able to deduct your charitable donation if you itemize, but you’ll also be able to take a capital loss when you sell the investment.
- The timing may be tricky if you donate your required minimum distribution from a retirement account. If you’d like to transfer your RMD to charity, delay taking your RMD until Congress passes the law allowing it for 2016. For the past few years, people over age 70½ have been able to transfer up to $100,000 from their IRAs to charity tax-free. The gift counts as their required minimum distribution for the year, but it is not included in their adjusted gross income. This can be a great way to avoid having to pay taxes on your RMD if you want to support a charity, and it gives you a tax break even if you don’t itemize your deductions.
For more information, please contact, Executive Director, Kerline Astre at Kerline@marinadvocates.org
Information provided on donating stock was sourced from Kim Lankford, Contributing Editor for Kiplinger online publication.