Donations to qualified charities are generally fully deductible. For large donations, discuss with your tax advisor both the types of assets to give and the best ways to give them. For example:
If you donate property you’ve held more than one year, you may be able to take a charitable deduction equal to its current fair market value. Plus you’ll avoid paying tax on the long-term capital gain you’d incur if you sold the property. For instance, instead of giving cash, donate appreciated publicly traded securities.
But beware: Gifts of appreciated assets are subject to tighter deduction limits than cash contributions. Excess contributions may be carried forward for up to five years.
To benefit a charity while helping ensure your own financial future, consider funding a charitable remainder trust (CRT), which pays an annual amount to you for a given term. At the term’s end, the trust’s remaining assets pass to one or more charities. You receive an income tax deduction for the present value of the amount that will go to charity (the remainder interest). And you can contribute appreciated assets and avoid paying capital gains tax on their sale.