4 Reasons Gifting Stock Should Be Part of Your Plan in 2024
While cash donations are valuable, most people don’t realize it’s one of the least efficient ways to support non-profits. Not only do you lose the liquidity of having that cash, but you also miss out on significant tax benefits. There is a better way!
Most people don't realize that charities can accept appreciated stock. Gifting stock has some distinct advantages, including:
1.You Avoid Capital Gains Tax on The Appreciation
Capital gains are wonderful until tax time. Most people will pay 20%-50% in capital gains tax depending on their holding period and tax rate.
2.You Can Deduct the Full Market Value of The Stock (up to 30% of AGI)
If you bought a stock for $10,000, and today it’s worth $100,000, you get to deduct the full $100,000 when you make that gift.
3.You Can Easily Reduce Concentrated Portfolio Positions
Anyone who’s held shares in big tech (think Apple, Microsoft, Google, or Amazon) for a decade knows what it’s like to be sitting on a big gain and a potentially problematic overweighting in their portfolio. Gifting shares is one way to bring your asset allocation back into balance without a year-end tax bill.
4. You Can Preserve Your Standard Deduction, And Avoid Wasting Your Gift
With the standard deduction at nearly $14,000 per person, it makes sense why nearly 70% of people don't itemize expenses (like charitable donations) on their taxes. However, this means that most people lose an important tax benefit when they donate: If you’re taking a standard deduction, you don’t get a deduction for charitable gifts.
When giving stock, consider gifting multiple years' worth of donations at once: You’ll have the opportunity to itemize and deduct in one tax year, then go back to standard deductions the next.
As always, this is not investment or tax advice. Your situation is unique, and you should consult a CPA when it comes to your taxes. If you'd like to learn more about investing or financial planning, contact Joe or Renee at Sweeneymichel.com