Donating Stock or Mutual Funds

It is never too early to think about your year-end giving – or what I can do to help CBS?

 If you have a balance due for the current fiscal, or have a special event you want to celebrate in the coming fiscal year there is no better time to consider increasing your support of the shul.  

 We would like you to consider two methods available to you for making your increased giving to CBS that may be more tax advantaged for you.

RMDs from Retirement Accounts

If you’re over age 72, you know that you must take required minimum distributions (RMD’s) from your retirement accounts.  What you may not know is that you can make tax-free direct transfers from your IRA (NOT ROTH IRAs) to charity (i.e., CBS) and have that count as your RMD.  If you’re over 70 1/2, you can transfer up to $100,000 tax-free from your IRA to qualified charities each year.  This transfer is referred to as a QCD, or Qualified Charitable Distribution.  The funds must be transferred directly to CBS (or another charity) so they will not be considered part of your Adjusted Gross Income (AGI).  Besides lowering your overall taxable income, keeping your AGI lower can also help you avoid paying higher Medicare premiums as well as lower taxes on your social security benefits.  If you are interested in taking advantage of this strategy, speak to your financial advisor to make sure that you process the transfer in accordance with the rules.  Please note that these distributions do not qualify as tax-deductible charitable donations since they are not includable in your taxable income, but you do receive the valuable benefit of excluding them from your income.     

Stock and Mutual Fund Donations

Did you know that you can donate your appreciated shares of stocks and mutual funds to the shul?  You can transfer your appreciated securities to Beth Shalom to satisfy your dues obligations, High Holiday, Annual Fundraiser, and any other donations and pledges.  The process is simple and quick, the cost is zero, and Emma in the office will be happy to assist you with the transaction.  Your charitable donation is equal to the value of the shares when you transfer them and in addition, because you are donating and not selling the shares (CBS does the selling immediately upon receipt of the shares), you pay no capital gains taxes!  This is a rare situation where you receive 2 tax benefits - a charitable deduction and avoiding tax on the appreciation in value of the donated shares.  And even if you no longer itemize because the standard deduction has increased in recent years, avoiding tax on capital gains is still a very valuable benefit.  Let Uncle Sam reward you for supporting your sacred community!

Just a couple of caveats, you can only donate stock and mutual fund shares that you've held for more than a year and the proceeds can only be applied toward tax-deductible items like dues, donations and pledges and not tuition payments.  Lastly, it would not be beneficial to donate shares that have not appreciated.  In that case, sell them first and then donate the proceeds.

The process is simple and quick but does take SOME time so to be sure that your stock donation is completed in the current calendar year please plan to transfer your shares by the 15th of December.

Because everyone's tax situation is different, this should not be construed as tax advice.  If you have any questions, you should read IRS Publication 526 and consult your tax professional.