Year-end planning is a tax-savvy approach to giving back. There are ways to optimize your assets to make impactful donations. 2moda has compiled several tips for year-end charitable giving to help you see your charitable ambitions through. Read on to learn how you can make a difference in your community in a financially conscious way.
Reflect on Your Income
Consider your income before taxes. An individual’s income will determine their tax liability, which, in turn, dictates appropriate donation sizes. A general understanding of your unearned income will give you a grounded idea of how much you can give at the end of the year.
Create a Giving Plan
Once you have finalized your year-end tax deduction goals and budget, you can configure details on which organizations you will give to and how much you will donate. Utilize financial tips for year-end charitable giving to keep you on track to make a sizeable impact as the year comes to a close. Being mindful of charitable tax benefits can make a huge difference in your or your company’s deductions.
Donate Long-Term Appreciated Securities
Cash and checks are the main forms of donations, but you will find that donating stocks, bonds, and mutual funds have become increasingly popular as well. Long-term appreciated securities have become more common because donors can claim their value as an itemized deduction on their federal income tax return. Donating company stock or bonds helps diversify company benefits and support charitable organizations simultaneously.
New Laws Honor Cash Donations
New laws have improved the tax benefits that donors can reap from cash donations. With a new tax law in place, you can now deduct up to 60 percent of adjusted gross income for cash gifts. You can apply this considerable advantage by making a sizeable monetary donation via cash. Long-term appreciated asset donations are still preferred for capital gains tax avoidance.
Consider Complex Assets
Additional private stock, bitcoin, and real estate should be considered in the running for year-end donations. When you donate property instead of selling it and paying capital gains tax, you become eligible for a charitable income tax deduction. You can give a portion or all of the property to an organization or fund of your choice to benefit from this type of donation.
Keep track of good donations that your company gives, whether this occurs throughout the year or during the holiday season. Accumulate receipts of substantial product donations that you can refer to on company taxes. 2moda offers a variety of bulk items that make donating simple and affordable. From wholesale wallets to homeless care packages and bulk school supplies, you are sure to find materials that you can donate to a cause important to your company.
Giving illiquid assets to a charitable fund is helpful to your taxes because they have a low-cost basis. Though the liquidation of donated assets may be more time-consuming than giving cash, many companies find it worthwhile. Just be sure that your intended organization has the resources to liquidate the donated gifts.