How to Maximize Tax Savings While Giving to Charity
I’m David Witter, founder and CEO of Financial Harvest Wealth Advisors in Winter Park, Florida. A question we commonly hear is, how do I maximize tax savings while giving to charity?
People will say, “Hey, I’m charitably inclined and I do charitable giving regularly, but I really want to make sure that I’m maximizing my tax savings for the way that I give.
And that’s one of the things that we see, but that we try to change, is people missing some of the more strategic ways to give.
Don’t Give Cash to Charity?
For example, we always like to say internally, “Friends don’t let friends give cash to charity.” You might be wondering, “Well, what does that mean?”
One way that you can give to a charity obviously is to write a check. You can give that to the charity, and then if you can do itemized deductions, you’ll get a charitable deduction for that check.
Give Stock to the Charity
But another way is, let’s say that you bought Amazon stock for $1,000, and now it’s worth $5,000. What if you gave the $5,000 worth of stock to the charity? Would you still get the $5,000 charitable deduction?
Still Receive Charitable Deduction
Believe it or not, yes. As long as you’re doing the itemized deductions. But in addition, since you have those capital gains, you can also mitigate your taxes by not triggering any of those capital gains by giving that stock to the charity.
Appreciated Stock or Appreciated Asset
So you can see that’s a much more strategic way than maybe just giving cash to a charity, giving an appreciated stock or appreciated asset.
Private Business Interests
And believe it or not, for you business owners out there, this even works for private business interests.
Qualified Charitable Deduction
Another way is once you’re in your retirement years using something called a qualified charitable distribution. So even if you’re not doing itemized deductions, the QCD, the qualified charitable distribution is a way of saving taxes when you’re doing your charitable giving.
If you have any questions on charitable giving, or if you want to maximize or make sure you’re maximizing your tax savings, that’s what we’re here to work with you on planning.