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What You Need To Know About Charitable Giving

| April 01, 2021
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At Credent Wealth Management, our goal is to keep you informed about relevant policies that could impact your financial plan. We want to share with you a few of those potential updates worth mentioning.  As with our other Credent Connect releases, these highlights will tend to focus on personal financial planning topics.

Gifting Appreciated Assets to Charity

If you are considering a charitable contribution this year, maximizing the impact of the gift is especially important. There are various incentives and benefits for generous taxpayers outlined in both our federal and state tax codes, and we are here to help you understand your options to maximize your donation. Most investors know they can donate appreciated securities in place of cash to their favorite causes, but they miss opportunities to secure the tax benefits of doing so.

There are various benefits of gifting appreciated stock:

  • The gifting of appreciated stocks is one of the more effective means of charitable giving as it can enable you to pay less in taxes and/or give more to charity.
  • Appreciated non-cash assets, such as marketable securities and real estate, may provide double tax benefits. This is done by receiving the same or similar charitable income tax deductions while avoiding the capital gains tax on the realized gains that would have been triggered during a sale of those assets. Cash is generally the last asset that should be considered when planning for charitable giving.
  • You may be eligible to receive an income tax charitable deduction for the full fair-market-value of the stock at the time of the gift. However, the gifted stock must be held by the donor for at least one year prior to gifting.

Although there may be upcoming changes to the federal tax code, generally a gift of an appreciated asset may be deductible by up to 30% of your adjusted gross income. For example, if your adjusted gross income is $100,000, generally up to $30,000 may be deducted in the first year. The IRS does allow that any excess above the limit can generally be carried forward and deducted in the next five years. There may be partial phase-outs of itemized deductions for high-income donors.

Credent Wealth Management believes in planning for any charitable giving you may do before retirement and after. Giving in the form of appreciated assets rather than cash can sometimes result in more donation to charity due to lower taxes owed by the donor. If you would like to know more about these planning opportunities, please reach out to your Credent Wealth Management team.

Investment advice offered through CX Institutional, a registered investment advisor.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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