The bad news is, well, there is a lot of bad news. The good news is that when there is a lot of bad news, Americans can be counted on to step up and help each other.
Our intentions are good, but are we gifting the best way? Sure, I’ll whip out the credit card to support a friend in Swim Across America or the MS 150. They just have to pass a portion of the calorie burn along to me.
But what about more regular gifting? That $20 you put in the church offering plate adds up to over $1,000/year. Is there a better way for you to give? Here are some ideas to consider:
- Qualified Retirement Distributions. If you are aged 72 or over and have IRAs that you are required to take money out of, you have the BEST mechanism for charitable giving. Instruct your IRA custodian to send all or a portion of your Required Minimum Distribution to the 501c(3) charity(ies) of your choice and the IRS will look the other way. It’s like you never received the money (because you didn’t) and you will owe not taxes on the IRA withdrawal.
- Not quite 72? Do you have stocks or mutual funds in a non-retirement account that have risen in value? Those shares can be transferred to most charities (they need to have a brokerage account open to receive). Say your shares of ABC stock were bought at $10/share and have risen to $100/share. You can give a $5,000 gift of shares that only cost you $500 to buy. Plus, you don’t sell the shares and pay capital gains tax. If you itemize when filing taxes, you can take a deduction for the amount of the gift (some exceptions apply – ask your CPA).
- Thinking of updating your ride? How about donating your old car to charity? Many organizations accept cars in any condition. You get a deduction for the value, they get to sell the car for cash to further their good works. You don’t even need to clean out your old wheels to get ready for sale.
If you can find a way to make gifting to charity cost less to you, you may be able to give even more. A win for everyone.