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Increase Your Tax Benefits through Charitable Contributions:

• Did you know that charitable contributions, such as those made to the Brick Store Museum are tax deductible? 
• Did you also know that they are only tax deductible if you itemize deductions on your income tax return? 
• Finally, did you know that only 13% of tax payers itemize their deductions?  That is because when the standard deduction ($30,700 for married seniors) is higher than your combined itemized deductions, it of course wouldn’t make sense to itemize!  Said differently, 87% of donors do not receive any tax benefit when they contribute cash/checks to charitable organizations. 

There are two common ways to increase tax benefits, even if you are someone who does not itemize:

1. Donating appreciated stock/securities.  Whether you write a check for $500 or donate $500 of Apple stock, if you itemize deductions, you are able to deduct $500. If you do not itemize, you do not get the deduction.  By donating stock, you have the added benefit of avoiding capital gains tax.  Say those shares were bought for $100. If you were to sell them, you would pay tax on the $400 of growth.  By gifting the shares to a charitable organization, taxes are never paid on that gain.  This is the case regardless of whether or not you receive a tax deduction.
2. Making gifts directly from your IRA/retirement.  At age 73, the IRS forces you to make withdrawals from your IRAs and pay tax on the amount.  The only way to avoid tax on these dollars is to give them directly to charitable organizations.  This is called a qualified charitable distribution, and you are allowed to do this up to $100,000 annually.  If you are one of the 87% of people who do not itemize, and your required minimum distribution (as calculated by the IRS) is $1,000, and you contribute $500 to a charitable organization by writing a personal check, you will pay income tax on $1,000 and receive no tax deduction.  If you take advantage of the qualified charitable distribution rules you could send $500 to the charitable organization directly from your IRA/retirement account and then your IRA required minimum distribution is only $500 and thus you will only be taxed on $500.  Ultimately, you and the charitable organization end up with the same dollars, except now you saved taxes on $500 of income.