If you are part of the other 86%, your generosity will provide no tax benefit. Cash will show up on your Schedule A just as a share donation would, but you don’t get to avoid the capital gains tax if you had to sell something to generate that cash.Īccording to the Tax Foundation, fewer than 14% of people itemize deductions. Donation of cash (typically credit card or cash)Ĭash is king … unless you want a big tax benefit. If you want specifics, feel free to contact me directly at or reach out through my company website,. You’ll need tax, legal and planning expertise. As I said, the tax consequences of these strategies can be significant, but they are more complicated to establish and maintain. The remainder goes to your beneficiaries. In a CLT, the income stream goes to charity during your life. In a CRT, you receive an income stream for life. The specifics of these strategies will make up another article, but they are generally designed to create an income stream. These are the vehicles we typically utilize for big dollars and big unrealized gains. To a charitable trust (CRT/CLT): A lot of acronyms, huh? These are trusts that you control but ultimately are for the benefit of the charities you designate. In future years, you can make grants from the fund to the charities you elect. The DAF allows you to take the donation in the year you make the initial contribution. If 2023 is a high tax year because you sold a home, business or anything else with significant tax consequences, you may want to take the charitable deduction in 2023 to offset that higher income. To a donor-advised fund (DAF): Take the same situation as above, but you’re not sure you know who you want to give the money to, or when. Another benefit: The nonprofit you give the money to will not have to pay taxes on the gain. You will be able to deduct the gross donation on your Schedule A, if you itemize deductions. Donating those shares directly to a charity means that you will not have to pay the taxes on the gain. That $600,000 gap is an unrealized gain that will be taxed upon sale. Donations of sharesĭirectly to charity: Imagine a scenario where you bought Apple (AAPL) stock for $100,000, and it’s now worth $700,000. If you are planning to donate in 2024, the money would have to be rolled into an IRA by Dec. Assuming you meet that threshold, as mentioned above, the money has to come from an IRA and not from an employer-based plan. As RMD ages have moved up, the QCD age has remained the same, at 70½. Traditionally, the QCD age was aligned with the required minimum distribution ( RMD) age. The biggest drawbacks of the QCD are the age minimum and the fact that the donation has to be given from an IRA.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |