While we’re creating new memories with our families this holiday season, it can also be a good time to look for ways to give back to others. For a lot of us, charitable giving is part of the activities we do at the end of the year. The tax benefits available allow us to give even more. Here are some methods to consider:
Gift appreciated assets. Give stocks or other investments that you have owned for more than one year. Your charitable contribution deduction is the fair market value of the securities on the date of the gift, not the amount you paid for the asset. Therefore, you avoid having to pay taxes on the gains. Avoid donating investments that have lost value. It is best to first sell that asset and then donate the proceeds, allowing you to take both the charitable contribution deduction and the capital loss.
Send a cash donation. Do this by December 31. Be sure to hold on to your canceled check or credit card receipt as proof of your donation. If you contribute $250 or more, you also need a written acknowledgment for the charity.
If you’re over 70 ½, use funds from your Traditional IRA. Amounts up to $100,000 can be transferred tax-free directly to a charity. If you are over 72, doing this can also satisfy all or part of your Required Minimum Distribution (RMD).
Giving back can be a great way to celebrate the holiday season. It can create memories with your family, while also teaching them important lessons about caring for others. Happy holidays and a wonderful New Year to all.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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