When it comes to taxation of charitable contributions, everyone is well aware that there is a big fat tax deduction waiting for them. What people might not realize is that investing in charitable contributions with your investment products is actually a better option because of the tax benefits. There is a lot that you have to think about, but ultimately if you invest your assets as investments instead of cash, you can reap more rewards. Here are five important things to understand about charitable contributions via investments and the taxes surrounding them:
-When you donate an investment to an organization that accepts such a donation, you are putting yourself in a position to deduct the full amount of the donation, provided that it does not exceed one-third of your income. Thus, if you make $200,000 annually and your investment is $50,000, you can deduct the entire thing. However, if you only make $120,000 annually and you make that same $50,000 investment, you can only claim a deduction for $40,000 of the investment, which is one-third of your salary.
-Many charities actually appreciate investment donations because of the tax breaks that they offer to everyone involved. Talk to different charities in your area to see if they have a preference or if they can help you figure out which is the better option in terms of taxation.
-Not all investments are completely tax deductible. You will have to figure out what type of tax deductions you are eligible for depending on the investment that you make and how much your investments are for.
-Offering investments is always better than donating cash in terms of tax liability and deductions. You can still donate to the causes that you wish and pay much lower taxes by donating an investment instead of cash.
-Taxation is different in every state, almost, so it will be up to you to learn the laws for investing in charitable contributions in your state. Talk to your financial advisor to get the real deal about taxes and giving to charity.
These are five things that are important when you are dealing with taxation of investing in charitable contributions. You really do owe it to yourself to take the time to figure out exactly how much you can donate in terms of investments and whether it is a good move for your portfolio. You might decide that cash is actually the better choice in the end, but you should at least consider the investment route. For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!