As you spend time looking at your tax returns and thinking how to best plan for the upcoming year, why not take a moment to learn of the benefits of donating appreciated securities?
It can be much more financially beneficial for you to donate stock that you have owned for more than one year than to sell the stock and donate cash because you will not have to pay capital gains tax. The capital gains tax is only paid on the profits of the sale of an investment.
This can save you a lot of money.
Here is an example of the benefits of donating stocks versus donating cash:
Imagine you own shares of stock that you bought for $7,000 five years ago, and today, the shares are worth $15,000. You figure this is the perfect opportunity to donate these gains to a charitable foundation. If you decided to sell the stock rather than donate it, you would end up paying capital gains tax on the $8,000 profit. Assuming a tax rate of 24%, the federal tax on the gains would be $8,000 x 24% = $1,920. Depending on the state you live in, there may be additional state taxes. Thus, selling the stock and donating the cash would end up costing you $1,920 in additional taxes. If you’re in a higher tax bracket, it would cost you even more.
However, if you donate the shares valued at $15,000 you avoid the capital gains tax because you would have no gains to declare (thus, you can give the $15,000 without paying the $1,920).
By donating stocks in this way, you can give your gifts to the children and lower the amount you have to pay in taxes this year at the same time.
It’s easy—all you need is our stock brokerage information to get started:
Receiving Institution Account Number: 33785142
Account Title/Registration: Coptic Orphans Support Association
Contact Name at Charitable Organization: Nermien Riad
Telephone Number: (703) 641-8910
Name of Receiving Institution: Vanguard
DTC Number: 0062
May God bless you, and may He reward you abundantly for your prayers and love for His children in Egypt.