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How Donating Appreciated Stock Will Save You Money

How Donating Appreciated Stock Will Save You Money

  • November 10th, 2014
  • jrhassociates
  • Comments Off on How Donating Appreciated Stock Will Save You Money

The holiday season is often a time of giving, both to those we know and love and those who are less fortunate than ourselves. However, when it comes to giving to charity, there are some ways that are more beneficial than others, both for yourself and for the beneficiary, such as donating appreciated stock.

If you own appreciated stock that you’ve been thinking about selling, but you don’t want to take the hit when it comes to tax time, that might be the way to go with your charitable donations this year. Instead of cutting a check and giving to your charity of choice that way, donating appreciated stock is a great alternative.

Donating Appreciated Stock This Holiday Season

If you’ve held an appreciated publicly traded stock for more than a year, it’s considered a long-term capital gains property. Let’s suppose you paid $4,000 when you bought stock a few years ago, and it has since grown in value to $10,000. Let’s also suppose that your income tax rate is 33% and your long-term capital gains rate is 15%.

If you sold the $10,000 worth of stock, you’d pay $900 in tax on the $6,000 gain. In addition, you could be subject to the Net Investment Income Tax (NIIT) of 3.8%, in which case you’d also pay $228 in NIIT. That’s $1,128 in capital gains tax and NIIT—money that you’d save by donating the appreciated stock to charity instead. In addition, you’d also get the $3,300 write-off from the $10,000 income tax deduction.

So in total, if you donated $10,000 of appreciated stock to charity, you’d save $4,428 in taxes, compared to the $3,300 write-off you’d get if you donated cash.

If you’re trying to find ways to minimize your taxes that are related to your investments, giving to charity is definitely a great way to go about it. If you need help planning the best ways for you to give to charity to best maximize your tax benefits, and want to learn more about donating appreciated stock, call the tax professionals at JRH & Associates at (516) 794-5752 today!

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