Have you noticed that the Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 indices have each reached all-time high levels in recent weeks?
This is not only fantastic news for 401(k) portfolios and other retirement accounts, but it's also a big deal for donors who hold appreciated stock in brokerage accounts.
Why might donors benefit from the growth of stock values, you ask?
In short, if an individual were to donate stock that has appreciated in value from their brokerage account directly to a charitable organization, capital gains taxes would be avoided, which could save you up to 20% on the gains earned, plus you gain an immediate charitable tax deduction based on the fair market value of the assets donated (if you itemize). (Note: the JCF does not provide financial, legal, or tax advice, please consult with your trusted advisor.)
This brings us to one of our top tax tips:
Open a donor advised fund (DAF) with the Jewish Community Foundation, Inc., donate appreciated stock directly into your DAF, gain the immediate tax benefits, and then you have the opportunity recommend grants to any qualified 501(c)(3) organizations at any future time.
Your DAF is professionally-invested in the meantime in one of several portfolios that you choose, and this balance can potentially grow tax-free over time, potentially enabling you to give even more money to the charitable causes you love.
In short: By frontloading your charitable giving into your DAF by donating appreciated stock or other assets, you can then initiate grants over the course of future weeks, months, or even years to make a huge, positive impact on the community, while also locking in key tax benefits.
Please consult with your trusted advisor as the JCF does not provide estate, financial, or tax advice.
To learn more about donor advised funds or for other related questions, please contact us today at 856-673-2528 or infojcf@jfedsnj.org.