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Three tax advantages when you participate in #GivingTuesday

November 26, 2019

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By: Sallie Byrd & Avril Ramer

With Giving Tuesday just one week away, it’s important to know the ways you can give back and enjoy potential tax savings. Here are three ways to make the most of your charitable contributions this year:

Make a contribution directly from certain IRAs
For those having to meet the required minimum distribution (RMD) from an IRA, but not wishing to increase taxable income, a qualified charitable distribution (QCD) is a great option. By sending your RMD directly to the charity, you can reduce your taxable income up to $100,000. Note the distribution must be made directly to the charity from the IRA in order to qualify as a QCD.

Contribute to an Alabama Scholarship Granting Organization (SGO)
The Alabama Accountability Act created a tax credit scholarship program allowing low-income families to use donations made to a scholarship granting organization, or SGO, to pay tuition for their children to attend a private school or an out-of-district public school. Contributions to an SGO are treated as a nonrefundable credit on your Alabama income tax return, with unused credits carried forward for up to three years. One downside is for tax years 2019 and forward, SGO donations taken as credits on your state income tax return are not considered charitable donations on your federal return.

Donate appreciated stock
Instead of selling an appreciated stock held long-term and contributing the proceeds, you can donate the stock directly to charity. This will eliminate capital gains tax on the appreciation of the stock, and you will qualify for a charitable deduction for the fair market value on the date of the contribution.

If you have questions about these options, please give us a call at 251-410-6700.