Charitable Contributions

Tax deduction for donations to qualifying organizations.

Charitable contributions to qualifying 501(c)(3) organizations can provide tax benefits even if you don't itemize.

Two Ways to Deduct

1. Above-the-Line (No Itemizing Required)

Up to $300 (single) or $600 (MFJ) of cash donations
Must be cash (not property or stock)
Must be to public charities (not donor-advised funds)

2. Itemized (Schedule A)

Cash donations: up to 60% of AGI
Appreciated property: up to 30% of AGI (deducted at fair market value)
Excess carries forward up to 5 years

Advanced Strategy: Donating Appreciated Stock

Donating stock held over 1 year is a powerful tax move:

Deduct the full fair market value (no capital gains tax on appreciation)
Avoid LTCG + NIIT that you'd owe if you sold first

Example: Stock purchased for $10,000, now worth $50,000:

Sell then donate cash: Pay ~$9,520 in tax (20% LTCG + 3.8% NIIT on $40,000 gain), donate $40,480
Donate stock directly: $0 tax, charity receives full $50,000, you deduct $50,000

Donor-Advised Funds (DAFs)

A DAF lets you make a large charitable contribution in one year (for the deduction) and distribute grants to charities over multiple years. Useful for "bunching" deductions.