Giving Tuesday is coming soon. This year, more than ever, the Associates of the American Foreign Service Worldwide needs your financial help. For the second year our principal fundraiser Art and BookFair has been canceled because of the pandemic,
To continue our vital efforts to help Foreign Service families with issues ranging from spouse employment, scholarships, and advocacy for legislative and regulatory changes, AAFSW will require more donations (which are tax deductible to the extent of the law).
A registered financial advisor describes the process in detail as follows:
An outright gift to charity is simply a voluntary transfer of property to a charitable organization. You can donate any type of property, assuming the charity will accept it, at any time and in any manner you wish. An outright gift to charity is also called a charitable contribution. There are three basic requirements for your gift to charity to be deductible for income, gift, and estate tax purposes:
- The organization to which you donate must be a qualified charity as defined by the tax code.
- Your gift must be some kind of property — the value of your time or personal services donated to a charity is not tax deductible.
- The property must be given to charity before the end of the tax year for you to take the deduction.
Provides income tax deduction
When you make a gift to charity, you are entitled to an immediate income tax deduction for the fair market value of the gift, assuming you itemize deductions. However, your allowable deduction is generally limited to 30 percent of your adjusted gross income (AGI), depending on the type of charity and the type of property donated to charity. Any amount that cannot be deducted in one year can be carried over and deducted in the following year, for up to five succeeding years.
The normal charitable gifts deduction rules are enhanced in 2020 and 2021. For those who itemize deductions, the limit on the charitable gifts deduction has been increased to 100% of AGI for direct cash gifts to public charities. For non-itemizers, a $300 (increased to $600 in 2021 for joint returns) charitable deduction for direct cash gifts to public charities is available (in addition to the standard deduction).
Does not produce taxable gain when appreciated property is donated
It is a well-established rule of charitable giving that when you contribute appreciated property (property that has gone up in value) to charity, you do not incur taxes on the gain.
GIVE A GIFT OF SECURITIES
While gifts of cash are simple to make and fully deductible, gifts of securities are frequently the most advantageous donation from a tax perspective. Contributing long-term, appreciated securities to your donor advised fund allows you to avoid paying capital gains tax. In addition, you still receive an income tax deduction equal to the full fair market value of the security at the time it is contributed. Gifts of long-term, appreciated securities are fully deductible up to a maximum of 30% of your adjusted gross income. (Portions of contributions in excess of the limit may be carried forward and used for up to five years.)
Please email email@example.com for contact information of our financial advisors and AAFSW’s account number for the transaction.
Purchase price of stock
Current value of stock
Stock contribution amount
Capital gain avoided