2021 Tax Benefits of Giving
Donating by December 31 ensures that your gift could be fully tax-deductible for 2021. And, don’t forget that because of the COVID-19 pandemic, the CARES Act allows you to deduct up to 100% of your adjusted gross income for charitable gifts this year if you itemize your deductions.
Giving appreciated stock or donating through a donor advised fund can be a very tax-advantageous way to support kids. Please call us at 310-396-4557 to make arrangements.
Given the stock market rally over the past 10 years, you may have stocks in your portfolio that have appreciated significantly from their purchase price. Donating stocks directly to the Ed Foundation is one of the most tax-smart ways to give, yet it is not well understood or widely used. Here are three reasons you may want to give stocks instead of cash:
- You get the exact same charitable deduction as you do by donating cash.
- By giving appreciated stocks, you ALSO eliminate the future capital gains tax you would have to pay if you sold them in the future.
- Donating stocks is easy and hassle-free; it also helps you keep your portfolio balanced and in-line with your long-term goals.
Here is a quick example of how it works: Let’s say you have $5,000 of Apple stock you bought several years ago for $2,000. If you sold the stock now to make a cash donation, you would owe capital gains tax on $3,000 (assuming a 33% rate, the tax would be $990). After paying the capital gains tax, you would be left with $4,010 to donate. However, if you simply donated the Apple stock directly to the Ed Foundation, you would pay no capital gains tax and be able to donate the full $5,000, as well as receive the full $5,000 charitable gift deduction. By donating stock, you are able to give $990 more to fund critical programs. That is almost 20% more that goes to support our schools!
The transfer process is simple. The year-end is fast approaching so please don’t wait if you want to receive the deduction this tax year! Please call us at 310-396-4557 to make arrangements.
