Working on your taxes this month might have you rethinking your strategies for 2019. If so, have a look at some of these tax strategies to do the most good for your community and your portfolio.
Donate appreciated stock rather than cash.
If you plan to make a donation to charity, you can give with a donation of appreciated stock and deduct the fair market value of the stock as a charitable donation. The advantage? You’ll be eligible to eliminate any capital gains tax on the difference between the price of the stock when you bought it and when you donated it. You may be able to make the same size gift and avoid paying taxes on the profit of your stock. Read more.
Do not give loss-deduction stock to a charity – sell the stock first.
If you sell a publicly traded stock at a loss, you have a tax loss that you can deduct. If you give the stock to a charity, you don’t get a deduction for the loss. Instead, sell the stock to create your tax-deductible loss. Then, give the charity the cash you realize from your sale of stock and claim the deduction for the charitable contribution and for the stock loss. Read more.
Bunch your charitable gifts for two or more years into one year.
The higher standard deduction may keep you from receiving a tax benefit from giving to your favorite charity every year. Instead, combine the gifts you hope to make in several years into one larger gift to push your itemized deductions above the threshold so you can enjoy the tax reward for your charitable donation.
One way to employ this strategy: donate part of your tax refund this spring. Before the end of the year, give what you planned to give in 2020 so the cumulative effect is to create charitable deductions for the 2019 tax year. It’ll be easier to give a fraction of your refund now and then give more at the end of the year, knowing you’ll reap a greater refund in the spring. Read more.
