Everyone Benefits When You Make Charitable Gifts
This article was written by Edward Jones for use by Brian Callaway , Financial Advisor
Now that we are in the heart of the holiday season , you may be thinking about ways you can put your money where your heart is . Specifically , you might be pondering which groups you should support with charitable gifts . And as long as you choose groups that meet the right criteria , your generosity can also be rewarding to you , in the form of tax benefits .
To begin with , you ’ ll want to make sure you are giving to a reputable charity . That means you ’ ll need to ask some questions . How does a group measure its effectiveness ? Is it devoting as much of its contributions as possible to the actual work of the organization , or is it spending too much money on administrative costs ? Generally , a worthwhile charity should spend at least 75 % of its income on programs . You may be able to find this type of information on a charitable group ’ s annual report and its website . You can also go to the website of one of the agencies that evaluates charitable groups . On these sites , you can get a lot of information dealing with a charity ’ s effectiveness , income , spending and other topics .
After you ’ ve identified a charity , or charities , you can decide how much you want to give and how you want to give it . If the charity has 501 ( c )( 3 ) status ( named after the section of the Internal Revenue Code that governs such groups ), your gift can offer you a tax deduction . So , for example , if you are in the 25 % tax bracket , and you give $ 1,000 to a qualified charity , you can subtract the $ 1,000 from your adjusted gross income ,
Call or stop by our office for more information or to schedule a complimentary portfolio review .
Making Sense of Investing . Brian Callaway
Financial Advsior 863 Flat Shoals Road , Suite 300 , Conyers , GA 30094
770-918-0725 • www . edwardjones . com
Member SIPC which will result in tax savings of $ 250 . Upon making your gift , make sure you get a receipt that lists the name of the organization and the date and amount of your contribution . ( Your maximum deduction will be limited to a percentage of your adjusted gross income .)
You can do more than simply write a check , however . If you have stocks that have grown significantly in value , you may want to donate them to a charitable group . You will be allowed a charitable deduction for the full fair market value of the gift on the date of the transfer , even if your original cost was only a fraction of today ’ s value . Furthermore , you will avoid the capital gains taxes you ’ d have to pay if you sold the stock , provided you ’ ve held the stock for at least a year .
If you do contribute appreciated stocks , you will want to be cognizant of the effect of your donation on your portfolio . If you were to give a sizable amount of growth-oriented stocks , would it affect your overall growth potential ? Conversely , if you are primarily giving away relatively conservative , income-producing stocks , would it end up moving your portfolio in a riskier direction ? When donating stocks , if at all possible try to do so in a way that does not harm your portfolio ’ s balance .
In any case , whether you give cash or appreciated assets , you ’ ll need to make your gift by Dec . 31 if you ’ re going to deduct it on your 2016 taxes . So be as generous as you can afford , think about the effect of your gift on your own financial situation – and be prepared to act soon .