![]() ![]() If you’re considering donating a losing stock, it’s better to sell the stock and take the capital loss. After a year, this is no longer considered a short-term capital gain, and you can deduct the full fair market value without subtracting your basis. This is why it’s best to donate stock that you have held for a year or more. If you would have short-term capital gain from the sale of the stock, then you have to subtract this appreciation from the fair market value in order to arrive at your deduction. Make sure you are donating appreciated stock that you have held for at least a year or more. It’s best to make your donation with a full understanding of what you need in order to get the biggest deduction possible.Ĭhoose the stock with the highest gains to maximize your tax savings. Choosing Stock to Donateĭon’t wait to start figuring this stuff out until you’re cracking open your 1040 tax return. Charitable organizations can even set up a profile on Cocatalyst so that all their stock donations are processed through the same service, reducing their headache and allowing them to connect with donors about their mission instead of forms.īut whether you’re handling your stock donation yourself or using a service, you want to make sure you know what information to track so you can deduct the correct amount from next year’s taxes. To donate stock through Cocatalyst, all you have to do is fill out the form, complete the signature, and submit – we handle the rest, including a tax receipt. There are services that streamline the entire process, minimizing the work you have to do, and making sure the organization gets their amount easily. It’s a win-win!ĭonating stock doesn’t have to be complicated. Plus, you get to bypass capital gains tax. That extra $1,060 makes a huge difference to any local organization: it might mean expanded programming at the community center, extra staff on a campaign, or a new library for your religious institution. They receive the full $5,870 and that’s what you write off on your 2019 taxes. Instead, if you donate the 20 shares, neither you nor the organization has to pay capital gains tax. That leaves you with $4,810 of your proceeds in cash to donate to the organization of your choice. In this case, you’d be paying $1,060 in taxes. You’re off to a great start – but wait before you sell that stock! If you sell the shares with the gain, you will have to pay capital gains tax up to 37%. That’s fantastic! You might be thinking about selling off the shares, and using that for your charitable contribution this year, so you can deduct a large amount from your taxes. That represents a gain for you of $2,860. In December 2019, those same shares are worth $5,870. Let’s say you bought 20 shares of AAPL stock in September 2018 ago for $3,010. Tax Benefits of Donating Stockĭonating stock saves you big for one simple reason: capital gains tax. In this article, we’ll go over everything you need to know about deducting stock donations, whether you’re going through a service or donating yourself. The most tax-efficient way to make charitable contributions is by donating stock. It’s not just a matter of giving more it’s also a matter of how we choose to donate our funds to organizations. It’s important to get into good financial health habits (such as tracking deductions) year-round, to save ourselves the headache and some cash in April.īut there’s also a way to save even more on our taxes through our charitable giving. But of course, when tax season rolls around, somehow we always find ourselves wishing we had done more. Charitable contributions are an excellent and well-known way to deduct more from our taxes, while improving our communities. ![]() We all want to save more come tax season. ![]()
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