🎄 December is a generosity season, and if you feel the need to make donations this year, you may be rewarded with tax advantages.
If you donate to an organization that meets the requirements of section 170(c) of the tax code, you can deduct that charitable donation from your taxes.
📝 Here are some examples of qualified organizations you might consider donating to:
- Veterans associations;
- Non-profit volunteer fire company;
- Fraternal societies;
- Corporations, trusts, community funds, funds or foundations organized and operated exclusively for religious, charitable, scientific, literary, and educational purposes.
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🛑 There is also a way to further increase your tax benefits by donating appreciated securities. If you have unrealized capital gains in your portfolio, you can make donations to organizations and avoid paying capital gains taxes on the appreciation.
✅ In addition, you can deduct the entire market value if you hold them for at least one year.
🔎 Let’s look at an example: if you bought a stock two years ago for $50 and it’s now worth $150, when you donate it, you won’t have to pay capital gains tax on the $100 of appreciation, and you can deduct the full $150 value of the stock.
Just keep in mind that the deduction has to be less than 30% of your Adjusted Gross Income (AGI), but if your gifts exceed the annual deduction limit, the excess can be carried forward for up to five years.
📍 At Wave Tax we can give you advice on everything related to you and your company’s finances. Contact us at info@wavetax.us