Before Your Make A Charitable Donation…Read This!!!
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by: MattCBA
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We’re getting to the time year when people start thinking about making a charitable contribution. It’s also time to think about strategies that not only can get you a tax deduction for your charitable contribution, but can save you even more — sometimes thousands and even tens of thousands of dollars in taxes.
Before you write a check to charity, look and see if you have assets, typically stocks, mutual funds or real estate, that are up in value. For example, say you bought a stock for $10 it’s now worth $100. Instead of writing a check to charity, give charity the stock. They get a stock worth $100. They don’t have to pay tax on your $90 profit. And neither do you.
You get the tax deduction of $100 as if you had written a check to the charity. So you avoid having to pay tax now or in the future on that $90 capital gain. Just keep in mind that it takes time to transfer ownership of investments, so you’ll want to move on this as soon as possible.
Here’s what you could do if you want to give a large holding to charity, either in a stock or mutual fund or even a piece of real estate, but maybe not all at once. You can set up a charitable gift fund. You donate the asset to the fund, the fund sells the asset and you get a tax deduction. There’s no time limit to distribute the proceeds, but you get the tax deduction this year.
Two other good strategies for charitable giving are a charitable remainder trust or a charitable gift annuity. These are somewhat similar — you make a future gift of assets to charity and in doing so, you get a tax deduction now while still getting a current income for a period of time, even lifetime!
Depending on your situation, any of these strategies could easily benefit you and your favorite charity (or charities) more than simply writing a check. So you might want to look into them before making any end-of-year donations.
www.BrianFricke.com
About the Author
About Brian L. Fricke, CFP®: Brian Fricke is the Author of “Worry Free Retirement, Do What You Want, When you Want, Where You Want”. For the last 6 years in a row Brian and his company – Financial Management Concepts – have been named one of America’s Top Wealth Managers. Orlando Business Journal has named his firm one of the top financial planning companies in Central Florida. Financial Advisor magazine – an industry trade journal- has recognized him as one of the leading financial planning firms in America. If you’ve been in Central Florida over 10 years, you may have heard him on the radio. He used to host his own show on WDBO radio. He’s also served on the City of Winter Springs Board of Trustees Pension Fund. Brian is a Certified Financial Planner. His firm – Financial Management Concepts – is a Fee Only Financial Planning firm. They currently manage over $98 million of investment assets for a select community of clients. Brian and his team have worked with retirees and pre-retirees from companies like AT&T, Sprint, Harris, Lockheed Martin and Siemens/Westinghouse. For more information, please visit http://www.BrianFricke.com
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