Maximizing Tax Benefits When Giving to DMC
By Robbie Rettmer
As we approach the end of the year, we want to provide you with some information on how you can maximize the tax benefits of your giving.
Below are three easy ways for you to consider. In most cases, donations can be electronically transferred from your brokerage account to DMC’s brokerage account.
Qualified Charitable Distributions (QCDs) from IRAs
If you are 70 ½ or older with a traditional IRA, you can make tax-free donations directly from your IRA to DMC through a Qualified Charitable Distribution (QCD).
*Benefits – You reduce your overall tax liability and by reducing AGI, potentially avoid adverse impacts on Medicare surcharges and the tax level on Social Security benefits.
*Example: Bob is 73 and must take $15K in RMDs. He allocates $5K of his RMDs to DMC, thus reducing his overall taxable income by $5,000 and, based on his tax bracket, saving over $500 in taxes.
Donate Appreciated Securities
If you own stocks, bonds, or mutual funds that have been held for more than a year and have increased in value, you can easily donate them to DMC.
*Benefits – You avoid paying capital gains tax on the appreciated value and you can deduct the full fair-market value of the securities on your itemized tax return, subject to IRS limits.
*Example: Over a year ago, Sally purchased $15K worth of stock that is now doubled in value. She donates all of it to DMC and based on her tax bracket avoids paying $3,000 of taxes on the capital gains.
Give Via a Donor-Advised Fund (DAF)
A DAF is a “giving account” that most major brokerages provide for their clients who seek a streamlined and flexible way to support 501c3 charitable organizations like DMC.
*Benefits: You receive an immediate tax deduction in the year you make the contribution, even if you decide to distribute the funds to charities over several years. You can contribute cash, stocks, or other assets, and the funds can potentially grow tax-free within the DAF.
*Example: Kelly transfers $100K of appreciated assets to her brokerage’s DAF and takes an immediate $100K tax deduction for this year even though she plans to stretch out her donations to DMC over the next few years.
Importantly, we can’t offer specific tax advice — you’ll need to consult your financial/tax advisor for that. But we can share educational / high-level information about these ways to give,
Please do contact me if you wish to discuss and/or to help coordinate receipt of your gift if you plan to move forward.
Sincerely,
Robbie Rettmer
Executive Director
rrettmer@dralamountain.org
(720) 935-2582
DMC Tax ID (EIN): 84-1535130