Four Tax-Smart Ways to Support the Causes You Love
We all have a list of causes near and dear to our hearts—animal welfare, a local food bank, a college scholarship fund, for example. Hopefully, amfAR—and its mission to end AIDS—is on your list, too. To help maximize your charitable donations, reduce your tax burden, and make a lasting impact on our lifesaving work, we’ve partnered with FreeWill to provide you with four easy-to-use online tools for smarter giving:
Qualified Charitable Distributions (QCDs) from IRAs:
If you are 70.5 or older, you can donate directly to amfAR from a traditional IRA through a QCD. In addition, if you are age 73 or older, you must receive a Required Minimum Distribution from your IRA each year, which is taxable. If you don’t, there is a 25% tax penalty. In addition, if you withdraw those funds personally and then make a charitable donation, you will have to pay 37% federal income tax on those funds. But if you donate to amfAR directly from your IRA, the donation will count towards your required minimum distribution, you will avoid the federal income tax on those funds, and you will be able to take the full amount of your charitable donation as a tax deduction.
Donor-Advised Funds (DAFs):
Donor advised funds are charitable giving accounts that are set up with a custodian for future philanthropic gifts. The custodian liquidates any non-cash assets, and all of the money is invested until it is distributed to charity at the donor’s discretion. Because the assets/funds invested in the account have been irrevocably earmarked for charity, the donor receives an immediate tax benefit in the form of an itemized tax deduction for income tax purposes.
The IRS considers cryptocurrency and non-fungible tokens (NFTs) to be property, and property-related tax principles apply. When you sell this virtual currency, you must recognize any capital gain or loss on the sale, subject to any limitations on the deductibility of capital losses. Many donors who invest in cryptocurrency or NFTs have recognized that donating such funds to charities like amfAR can help them both avoid capital gains taxes and receive a big tax deduction at the same time.
We hope you find these tools helpful. And as always, thank you for your generous support.