Donate Stock or Mutual Funds
Donating appreciated securities, such as stock or mutual funds, to StandUp for Kids is a tax-wise approach. Some donors choose to make gifts to our organization using long-term appreciated stocks and mutual funds. There is a definite attractive tax advantage associated with such gifts.
The benefits available to you when making a contribution of stock or mutual funds may include:
- Avoiding federal and state tax on the capital gain;
- Receiving an income tax deduction (federal and most states) for the full market value of the gift if you itemize deductions on your tax return and have held the assets one year or longer;
- Making a larger gift at a lower original cost to you.
An Example of a $5,000 Stock Gift:
- You purchase a stock for $1,500 several years ago, now worth $5,000, and donated it to us as “Section 501(c)(3)” charitable institution without having to recognize the $3,500 capital gain.
- You avoid paying 15% federal capital gains tax of $525.
- Assuming a 5 percent state capital gains tax rate, you would avoid an additional $175 tax.
- By itemizing your deductions, you are eligible to take a $5,000 charitable income tax deduction that saves you an additional $1,400, assuming a 28 percent tax bracket, of federal income tax for the year you made the gift.
- If your state allows you to deduct charitable gifts, a 5% state income tax rate results in an additional savings of $250.
By making a stock or mutual fund donation, you are able to make a $5,000 gift that generates a total tax savings of $2,350, more than a direction cash contribution of the same amount ($1,650 in income tax savings), and more than had you sold the security first ($1,419 in income tax savings).
Donating long-term appreciated securities is clearly the tax-efficient way.
According to instructions offered elsewhere:
- Itemize your tax return in order to deduct a charitable donation.
- Own the security for at least one year before donating or you will be limited to a deduction of your original purchase cost.
- You may take a deduction valued up to 30 percent of your adjusted gross income. If greater, you may carry any unused deduction forward for up to five years until it has been fully used.
- Consult your financial planner or tax advisor who can assist you in evaluating the tax advantages available to you when making a donation of appreciated securities, and the accuracy/recency of the information provided here.
To learn how to easily transfer your securities to StandUp for Kids, please contact our national program support center for special instructions.