In a study performed by the Network for Good, researchers found that 29-percent of donations for an entire year occurred in December with 11-percent in the last three days of the year. Creating a charitable contributions plan can lead to a positive impact on the cause while lowering the tax impact on your wallet. The earlier you can plan your contributions with HCR Wealth Advisors in the year, the better.

HCR WEALTH ADVISOR

Stock donations

One way to make a major impact is by donating stock. There are four major advantages to donating stock in place of cash:

Cash can be used elsewhere

When donating stock from your portfolio, this frees up the amount of cash you were going to give so it can be invested in an equal amount of the stock gift. This helps you continue to grow your money while still giving to a reputable cause.

Increase the size of your gift

HCR Wealth Advisors has found that by selling stock to raise donation money, you most likely will incur a tax liability from the actual sale. However, by donating stock to charity, you will receive a tax deduction at the full fair market value of the stock.

Remove tax liability

Federal capital gains tax on investments can be as high as 20-percent without the added state capital gains tax. Add in the 3.8-percent Medicare tax on investments and your total tax could be over 25-percent. On the other hand, HCR Wealth Advisors note that donating stock removes the tax liability altogether.

Tax deductibility

In addition to not having to pay a tax liability, stock donations are tax-deductible for those who itemize their deductions. Although the standard deduction has been raised, resulting in a greater hurdle, those who can give will help their wallet and charities through stock donations. HCR Wealth Advisors note the maximum percentage of appreciated stock donations is limited to 30-percent of your Adjusted Gross Income.

This article is provided for informational purposes only and should not be interpreted as investment advice.