Many people choose to donate to charitable donations, whether it is by giving money or donating stock. Understanding the differences between these options is always a good idea to help you decide which is the best option for you.
Here are a few of the main reasons why you should consider donating stock instead of cash to a charitable organization.
#1 Remove Tax Liability
One of the benefits of donating stock is that it can help you remove a tax liability from highly appreciated stock. Federal capital gain taxes can be very expensive, as much as 20% and some states even impose capital gains taxes. Fortunately, you can avoid these fees by choosing to donate your stock instead of cash.
#2 Find a Better Use for Your Cash
One of the options you have in donating stock from your portfolio is to deposit additional cash that is an equal amount to the value of the gifted stock. You can also purchase the stock at a higher cost basis if you plan on lowering potential tax liabilities. You also have the option of purchasing different investments to maintain your assets.
#3 Donating Stock can Increase the Size of Your Donation
One of the ways to receive a tax deduction is to donate your stock directly to a charity organization. On the other hand, selling your stock for a cash donation can incur a tax liability. If you have any questions, you can always reach out to HCR Wealth Advisors to learn more information.
HCR Wealth Advisors is a company that specializes in wealth management for a variety of clients. Our primary goal is to establish relations through education, trust, and service.
This article is provided for informational purposes only and should not be interpreted as investment advice.