As we approach the end of the year, it is time to consider giving a year-end donation to your favorite charities. There are still many tax -favored ways to give. Here are some to consider:
- Give appreciated stocks or mutual funds. If you have appreciated stocks that you have owned for 1 year or longer, you can give those shares to your organization, get a deduction for the full fair market value of the shares, and pay no capital gains tax.
- If you are 70 ½ or older, you can direct a portion of your required minimum IRA distribution to most public charities. You report no income, you take no deduction, but it can satisfy some or all of your required minimum distribution, which saves income taxes. You need to make the rollover distribution from an IRA for which you did not take a deduction on your form 1040. If you do, your exclusion could be limited or even eliminated.
- If you have a Donor Advised Fund, request the fund make a distribution to a charity. Let the charity know you have done so because the Donor Advised Fund won’t identify you. You got the tax deduction going into the Donor Advised Fund, so you won’t get another deduction coming out.
- Donation for 100% of Adjusted Gross Income. If you are the rare individual who can make a large donation of cash, you could be eligible for a deduction equal to 100% of your adjusted gross income. You must make the gift in cash to a public charity and not to a private foundation or donor advised fund. Congress wanted these donations to have an immediate impact. This ends at the end of 2021.
- Donation of $300 cash ($600 for married filing joint) to charity if you don’t itemize. If you don’t itemize your deductions, you can still give $300 cash individually or $600 for a joint return to the charity and take a deduction on the first page of your 1040 rather than your Schedule A. This rule also ends at the end of 2021.
If you don’t know which charities you wish to support, but want to preserve a deduction for 2021, create a donor advised fund and contribute to it before the end of the year. You then have the flexibility to decide
These are some of the easier ways to give to charity as we approach the end of the year. You can help your favorite charity and get a tax deduction.
If you have questions or need assistance, please call us at (847) 729-3939. If you want to make a planned gift, please call for an appointment. We are available by phone, in-person, or Zoom.