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How to minimize taxes with charitable donations

On Behalf of | Aug 9, 2022 | Trusts |

Donating to charity has always been a great way to help minimize your Connecticut taxes. There are a number of strategies that you are free to adopt in order to enjoy this tax advantage to the fullest. The IRS has enabled a special provision that allows you to deduct $300 in cash donations to a qualified charity, even after a standard deduction.

Trusts are a great way to donate

Charitable remainder trusts are a method you can make use of to provide for your family in the short term. After they have passed, the amount that is left over can go straight to the charity that you designate to receive it. This is a great way to cover your family obligations while also saving money through a timely charitable deduction.

Contribute to a charity from your portfolio

Another way to reduce your taxes is by donating to charity may be to give some of your long-term appreciated securities rather than cash. These can include such assets as stocks, bonds, mutual funds, or even real estate. Doing so will bring the benefit of allowing you to avoid capital gains taxes.

This is a tactic that allows you to get the best chance of getting a deduction based on the appreciated market value of the assets that you donate. It can also allow you to make a larger charitable impact since the onus to pay capital gain taxes will no longer be on them.

Donating to charity is the smart move

If you are serious about contributing to a charity, you may as well do so in the most cost-effective manner. This will be a move that directly benefits your chosen cause while also allowing you to minimize taxes for all parties that are concerned in the transaction.