Tax Strategy Considerations
You may be able boost your charitable contribution due to the added bonus of built in tax code deductions or advantages for your charitable contributions. There are two easy tax strategies to capitalize on charitable giving:
IRA Charitable Rollover: as you may know at 70 ½ you are required to take a minimum distribution from your individual retirement account and the required amount is counted as taxable income in that year BUT there is a charitable exception called a charitable rollover. Instead of taking the distribution and then donating it to your favorite charity, you can direct your required minimum distribution to a public operating charity (Rein In Sarcoma) using the charitable rollover and avoid the income tax consequence. The charity (Rein in Sarcoma) receives the entire contribution, tax free!
Appreciated Stock: if you have stock with a very low basis (cost at which you purchased the stock) that has appreciated greatly over time you will pay capital gains on the appreciation when you sell the stock, BUT if you donate the highly appreciated stock to a charity, you avoid the capital gains tax and receive a charitable income tax deduction for the fair market value of the stock on the donation date. For example: you purchase a stock at $1 and it is now worth $100 you would pay capital gain tax on $99 of income but you may donate it to Rein in Sarcoma and receive a $100 charitable income tax deduction.
By utilizing these opportunities, you can lower your adjusted gross income or receive a charitable income tax deduction and Rein in Sarcoma receives the entire contribution tax free. Find additional charitable contribution tax tips.