charitable stock donation
Is it better to give appreciated stock and include in tax deductions or donate RMD money.I itemize due to high property tax and high state tax Illinois.
Terry Says
But your RMDs are not considered taxable income in Illinois — I hope you know that. Still, you could have a high state tax obligation from other income.
I guess that depends on whether you really want to get rid of that appreciated stock. Gifting it would be a good way to solve the problem of capital gains taxes you’d incur by selling.
When you donate stock that has increased in value and has been held for more than one year, you can transfer it directly to a qualified charitable organization. By doing so, you:
Avoid capital gains tax on the appreciation, which could otherwise be up to 20% plus a 3.8% Net Investment Income Tax for high earners.
Claim a charitable deduction for the full fair market value of the stock at the time of donation, subject to IRS limits (typically 30% of your adjusted gross income for non-cash donations, with a five-year carryforward for excess).
Increase the amount the charity receives, since the organization gains the full value of the stock without any reduction for taxes.
Or you can gift cash — from any source, including your RMD.
But consult with your tax advisor because there are limits on how much money you can contribute as a percentage of your income each year.
