Charitable Giving Tips

To gift is also to receive

As we near the end of 2017, you’re surely considering Christmas wishes and a big meal to prep, but you may also be thinking about your year-end charitable giving. After all, charitable giving is a powerful financial tool. You can support a worthy cause of your choice, possibly lower your tax bill at the same time, and end the year on a strong note. Here are a few things to consider as you get started:

Let Your Generosity Show

If a charitable organization has 501(c)(3) tax status, your gift can be tax-deductible. On the most basic level, a gift of cash can earn you a tax deduction. For example, if you are in the 25 percent tax bracket and you give $1,000 to a qualified charity, you lower your tax liability by $250.

Alternatively, donating appreciated securities may offer a greater tax benefit. If you give appreciated securities held for more than one year, you can deduct the full fair market value, up to 30 percent of your adjusted gross income. In addition to the deduction you receive, neither you nor the qualifying charity will owe capital gains taxes on the donated investments. 

Other Charitable-Giving Vehicles

There are many other charitable-giving tools and strategies you can pursue. Charitable trusts, for example, can be established to help you accomplish long-term philanthropic and tax management goals. Charitable trusts are irrevocable trusts established to receive gifts of cash or other property on behalf of a qualified charitable organization, and may be a practical means of providing income and/or transferring assets. 

Or, donor-advised funds may be used by individuals who intend to give to charities over time and who want to maximize their current income tax deductions in the process. Donor-advised funds can provide a means to help support worthy causes of your choice while improving portfolio tax efficiency on an ongoing basis.