As Christians, the end of the year represents a great time to reflect and focus on the meaning of the Christmas season. For many of us, gift giving is a major part of our worship and celebrations at this time of the year. Fortunately for us, our tax laws still celebrate charitable gifts. However, the benefits are limited to a specific giving window each year. We want to share with you how you can maximize your charitable gifts this Christmas.
When giving charitable gifts, most Americans give cash. In fact, 75% of all charitable donations are in cash, but the average person carries the majority of their personal net worth in assets other than cash – some up to 80%. These assets – stocks, IRA distributions, real estate and shares of a business can all make excellent charitable gifts and potentially give you favorable charitable deductions. It all depends on when and how you give the gift.
According to our partner, the Barnabas Foundation, there may be advantages to giving appreciated stock. Here’s what they shared in a recent article:
If you have appreciated stock that you have owned for at least a year, you can receive a double tax benefit by donating this stock to Precept. Not only will you receive a tax deduction for the fair market value of the stock gift, but you may also avoid paying capital gains taxes on the proceeds. If you haven’t evaluated your portfolio in the last 3-5 years, today would be a good time to check for any stocks that could make great charitable contributions.
There are also ways to make tax-free distributions from your IRA. If you are 70 1/2 or older, you may give a maximum of $100,000 a year. These gifts count toward your annual required minimum distribution and will not be included in your adjusted gross income. It’s important to note, however, that if you use a check from your IRA, the check must be received and processed by Precept prior to December 31 to be counted as a distribution for 2018. Otherwise, it will count as a 2019 distribution. If this is something you are interested in, be sure to send in your gift as soon as possible and let us know to expect it.
By giving these gifts to charity, you can give a larger gift and reduce or eliminate capital gains taxes. For more information about giving appreciated assets contact Elaine Watkins at 423.296.8707.