Give…And Get a Tax Deduction

Of course, the only reason we give shouldn’t be for a tax deduction. But it is a nice bonus that you can get a tax advantage when you choose to donate in order to help others. And, with the holiday season prompting a little more generosity — and the end of the year providing a catalyst for improve tax efficiency — it is little surprise that many are trying to figure out what they can donate. The good news is that there are some tax advantaged ways to give.

You probably already know that you can write a check and deduct that (as long as you have a receipt to back it up in case of audit). But there are a couple of other charitable donation options that can net you a tax advantage:

1. Investments: You can donate investments that have gained. If you donate an investment that has gained value over the years, you can avoid capital gains on the increase, and you can take a tax deduction for the entire value of the investment. If you want to donate a losing stock, though, you are better off cashing it out, taking the loss (which can be tax advantaged) and then taking the deduction for a cash donation.
2. Stuff: You can get a tax advantage for donating stuff in good condition. Just make sure that the items are usable, and make sure that you get a receipt from the eligible charity to which you donated the items.

There are plenty of opportunities to give to others this time of year, and if you plan it right, you can receive a financial advantage in addition to the emotional and intangible advantages associated with giving.

Image source: Wikipedia Commons