When you filed your income tax return last year, you may have been surprised that you could not deduct your charitable contributions because you did not itemize your income tax deductions. Or perhaps you were surprised to find that you had to pay capital gains tax. It’s too late to reduce your taxes for last year, however, your carefully planned contribution to the Capuchin friars can save taxes this year even if you do not itemize.
When you sell securities – stocks, bonds, or mutual funds – that have increased in value, you will owe taxes on your profit – or gain – from the sale. If you have owned your securities for longer than one year, your profit will qualify as a “long-term capital gain” which is taxed at favorable rates, 15% for most taxpayers, but as high as 23.8% depending on your income level.
However, if you give those appreciated securities to the Capuchin friars instead, you will pay no tax on the gain. Even better, if you itemize your deductions, you can also claim a charitable deduction for the full value of the securities. It’s a double tax savings.
For example, if you sold for $10,000 shares of stock that you purchased for $2,000, you would have a taxable capital gain of $8,000. If you owned the shares for more than one year, you would owe capital gains tax of $1,200 (15%), perhaps more. By giving those shares to the Capuchins instead, you would completely avoid the tax on the capital gain. In addition, you would be entitled to a $10,000 charitable contribution deduction (if you itemize).
We would be happy to provide more information and stand ready to help you determine how a gift of appreciated assets to the Capuchins can help you save taxes. Please contact Kristi Hassouna in our development office at 313-939-2002 to learn the details.