1. Donating stock directly to charity is one of the most tax-smart ways to give. Yet it is often not well understood or widely used.
By donating stock that has appreciated for more than a year, you are actually giving 20 percent more than if you sold the stock and then made a cash donation. The reason is simple: avoiding capital gains taxes.
The maximum federal capital gains tax rate is 20 percent on long-term holdings. If you donate the stock directly to a charity, there's no capital gains tax to pay. Plus you are still eligible to deduct the full fair-market value of the asset you donated from your income taxes, up to the overall amount allowed by the IRS.
And remember that your appreciated assets can also include assets that are not publicly traded, like restricted stock or bitcoin.
2. A new law allows a special one-time election to make qualified charitable distributions (QCDs) through charitable remainder trusts and gift annuities for up to $50,000. These amounts are indexed for inflation annually. For 2024, the maximum QCD amount is $105,000, and the one-time election for qualified distributions to charitable gift annuities and charitable remainder trusts is increased to $53,000.
For more information, please contact your tax advisor.
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