5 Benefits of Stock Charity You Need to Know
Donation is one such part of our life that keeps us eternally happy, or I would spiritually say, it creates a feeling of completion within us. Almost every benevolent or generous person thinks of donating something to the needy. While some decide a particular day or time, some keep donating without worrying what others will say.
If you also have benevolence within you, and want to give something different to the needy, not in cash, but in other forms, then the charity of stock would be the wisest decision. Though people donate many different things, stocks charity or donation not only makes you feel complete and internally satisfied, but it also helps you with tax exemption.
However, before donating your stocks, it is important for you to be aware of some basic tips so that you can know that the object of your donation is best and rightfully fulfilled. So, let’s get to know about them.
Make sure if the value of the stock has decreased or increased
Remember, there are two basic points that decide the stock quality, i.e., the stock holding period and the value of the stock that you have kept for more than a year. If you are looking for the tax exemption then the high-valued stocks are the best option to give in donation.
So, if you are having a stock that you bought last year, and its value has now subsequently increased, you can easily enumerate the deductions from the current market value of the stock for the charity. This method will help you avoid the tax on the capital gains that you get because of the increased stock value.
Nevertheless, here is the catch, if the stock is less than a year old, the increased value may not provide you with profit more than the cost value. That means, you are only able to deduct the amount you invested to buy that stock and not as per the current value.
What if, the stock is devalued
What will you do with the dying horse? Of course, donating is neither noble nor profitable. In that case, there is only one option, sell your stock in the market and try to get the cost value at least. You may overcome the loss if the value is itemized properly. The cash now can be given to the charity for perusal. However, if the stock has chances to grow, it is always a smart move to hold the stock for future prospect.
Donor-advised firm help you decide better
What if you own the profitable stocks, you need a tax break, but are confused to decide about the trust for whom you want to donate. You can contact your brokerage firm or the Mutual Fund Company, and request them to open a Donor-Advised fund. It will give you the desired tax break, and you are provided with sufficient time-frame to decide the name of the charitable trust. A Donor-Advised firm is like a stock locker you can hold your stocks, complex investments or sometimes your investment in real-estate.
Do you want to transfer from your RMD account?
It is obvious, your retirement saving is your tool to survive when you are not earning regularly. However, this cannot save you from the tax burden. The easiest way is to donate from your RMD account. Often, some amount from the IRSs fund get tax exemption, especially when used for donation.
Apart from these, the knowledge of terms and procedure to transfer stock or stocks to charity is also important to know. You may ask the brokerage firm for the right procedure as well as the charitable trust for the right period. Remember, your stock is the key of your earning and donation is the noble cause, so why not blend the two and get some profit from taxes?