The market will be very generous to investors in 2024, and those who are naturally giving can benefit by sharing some of their winnings with their favorite charities. Giving Tuesday follows Cyber Monday on the holiday calendar and marks a day for individuals to consider donating to their favorite charities. With the S&P 500 rising more than 26% in 2024, cash may not be the best way to fund organizations. Instead, outright gifting of appreciating assets, whether stocks, mutual funds or even cryptocurrencies, is the smartest way to share your wealth. “Cash used to be the plan’s No. 1 asset,” said Brandon O’Neill, a philanthropic planning consultant at Fidelity Charitable, which sponsors donor-advised funds. “If you give away appreciated assets, not only can you get a tax deduction, but you can also avoid capital gains tax liability.” This is because investors who cash out from stocks are subject to capital gains tax on any appreciation. In 2023, non-cash assets, including stocks, accounted for 63% of Fidelity’s charitable contributions. Charitable Deductions Individuals who itemize deductions on their tax return (i.e., whose itemized deductions exceed the standard deduction of $14,600 for single filers or $29,200 for married filing jointly in 2024) are eligible to write off their charitable contributions. If the asset has been held for at least a year, you can instruct your broker to donate it to any charity and calculate a tax deduction based on the asset’s fair market value at the time of donation. Therefore, from a tax-saving perspective, the best assets you can give away tend to be those with low cost and high appreciation. “Taxpayers receive the fair market value of the donation compared to the cost basis, so (the donation) has a greater impact on their own personal tax return,” said Miklos Ringbauer, a CPA at MiklosCPA in Los Angeles. Big impact. See below for a list of S&P 500 stocks that will perform strongly in 2024. These donations can also have portfolio benefits, starting with Morningstar Personal Finance and Retirement. Donations can also help employees who are paid in stock diversify some of their risk, said program director Kristina Bentz. “Typically, the really good candidates for this kind of donation are employer stock — as concentration increases. , which often creates significant risk for a portfolio,” she said. Bentz added: “We’ve seen broader diversification gains this year, but U.S. large-cap stocks have seen incredible gains and are a logical choice if you want to reduce risk and make a charitable donation.” Both giving methods are due to standard With deductions so high, it may make the most sense for donors to “lump” several years of giving into one lump sum. By transferring appreciated assets to donor-advised funds, investors can streamline giving and make grants to multiple organizations. “You can use this bundling strategy to itemize deductions in some years and take the standard deduction in other years,” Bentz said. For older investors – especially those over 70 1/2 – the best move may be to take a qualified charitable distribution (QCD) from an IRA, assuming they don’t need the money. IRA withdrawals are taxed, while QCDs are not – as long as they are sent directly by the trustee to a qualified charity. In 2024, qualified IRA owners can deduct up to $105,000 of QCDs from their taxable income. Since IRA owners don’t need to start taking required minimum distributions from their IRAs until age 73, QCDs starting at age 70 1/2 can help investors reduce their balances – which, in turn, can lower their required RMDs going forward. Benz said.
Save taxes during the holidays with these strategies | Real Time Headlines
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