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Are you thinking of making year-end charitable donations to boost your tax deductions for 2018? Here are a few strategies that you might consider as you decide where and how much to donate to charity.
Audit-proof claims. For charitable donations the IRS has imposed strict validation rules. No matter how large or small, you are required to keep records of all your financial contributions. For all your donations, be sure to obtain written documentation.
Use a credit card. Before the end of the year, you can use your credit card for your charitable donations in 2018, this includes your online donations. You can claim your donations made as late as December 31st.
Donating appreciated stock. Your Capital gains property owned more than one year can usually be deducted at fair market value (FMV). For instance: Stock acquired 10 years ago for $1,000 that is now worth $5,000, can be deducted at the full amount of $5,000. The appreciation in the stock value is not taxed.
Depreciated stocks. Generally it does not make sense to donate a stock that has declined in value. You will not receive any tax benefits for the loss of value. Rather, you could sell this stock and donate the profits. On your 2018 tax return, this would entitle you to a capital loss as well as a charitable deduction.
Cleaning your closets. Don’t be too quick to throw out items that can be donated to charity. The tax laws permit charitable deductions for used clothing and household goods that are in good or better condition.
Are you looking for more smart tax strategies? At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at (866) 497-9761 to schedule an appointment with our advisors.
