Most people give to charity by writing a check. It works, but if you have been investing for a while, there is often a smarter way to give the same amount and keep more out of the tax collector's hands.
The move is to give appreciated investments instead of cash. When you donate a stock or fund that has grown in value, you skip the Glossary of Financial ClarityCapital gainsThe profit when you sell something for more than you paid. Hold it longer than a year and it's “long-term,” which gets taxed at friendlier rates. Sell inside a year and it's “short-term,” taxed like your paycheck.General education only. Not tax or investment advice. See the full glossary tax you would have owed on selling it, and you can still deduct the full market value if you itemize. The charity receives the same dollars, and you gave with money the Glossary of Financial ClarityIRSThe IRS, or Internal Revenue Service, is the federal agency that collects taxes and enforces the tax code. It processes returns, sends refunds, and runs audits. Most of what feels like a tax rule in everyday life is the IRS turning the laws Congress writes into forms, deadlines, and instructions.General education only. Not tax or investment advice. Read the full story never took a cut of. A Glossary of Financial ClarityDonor-advised fundA charitable account you fund now, take the tax deduction for now, and then give away to charities on your own timeline later. Think of it as a holding tank for your generosity. Popular in a high-income year when you want the deduction but haven't picked the charities yet.General education only. Not tax or investment advice. Read the full story, or DAF, makes this easy to repeat. You move appreciated shares in, take the deduction that year, and grant the money out to charities over time.
There is a second tool once you are older. A Glossary of Financial ClarityQualified charitable distribution (QCD)A move for the charitably minded over 70½: send money straight from your IRA to a charity and it never counts as taxable income to you. It can also count toward your required withdrawal. Giving that happens to be tax-smart on both ends.General education only. Not tax or investment advice. Read the full story, or QCD, lets you give straight from an IRA after a certain age and have it count toward your required withdrawal without adding to your taxable income. Different tools, same idea: match the gift to the account that makes it most efficient. If giving is part of your year, this is worth planning on purpose.
Hosted byNick GeorgeCFP®, ChFC®, CLU®, IWA™FounderView bio →
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