MD Cents: The Greatest Gift of All…

As we finish up a year many people become introspective about their lives and begin to make plans for next year. Resolutions and promises to our selves to do something better or stop doing a negative habit are commonplace. At this time of year, it is also common to give gifts to people that are special in our lives. Since this blog deals with financial issues, in this gift-giving season, I encourage you to consider giving a gift (or more) to your favorite charity. According to the association of fundraising professionals most charitable organizations bring in between 33%-50% of their annual budget in the last 3 months of the year.

Giving charitable gifts has many benefits to the giver, the least of which is the tax deduction you get for giving the gift. What are some of these benefits? Let’s talk about some of them.

Charitable giving is good for your health! A 2003 study showed that if you give regularly to charity (time or money) you have a lower risk of dying over the next 5 years. Another study demonstrated that if you give, you are happier than study participants that didn’t give.

The bottom line is give. Whether it is 10% of your income dictated by many religions or another amount you and your family are comfortable with please be charitable this Holiday Season. We are blessed as physicians with an above average income and as such should have extra in our budgets to give and use our dollars to do good work through organizations in our communities and around the world.

 

No has ever become poor by giving.

–Anne Frank

 

The Federal government subsidizes charitable giving by providing a tax deduction for those who participate. The deadline for giving for it to benefit you on your 2016 tax return is December 31st, 2016. You must make the donation by that time to be able to claim it on your tax return this upcoming spring.

 

Most people think of donating money when they consider charitable giving but there are other ways of donating things to charity that still will give you both intangible and tangible benefits. You can donate property (i.e. clothes to the Salvation Army or Goodwill, a car to a veteran’s organization, or a prize for a church fundraiser), or you can donate stocks/mutual funds you own. Donating stocks or mutual funds that have gone up in value can have a wonderful double benefit for you and the charity you donate to. This strategy will really apply to folks who have investments that have really increased in value and selling them would generate a very large capital gains tax bill to the person(s) holding them. Usually this won’t be folks just starting out in their careers, rather this is usually going to be someone nearer the end of their investing career. For most of us, we haven’t been investing long enough for our investments to have gone up so much that they would generate a large tax bill if we sold them, and for that matter, most of us shouldn’t sell any mutual funds we have as they need to grow for many years to enable us to have a large enough nest egg to retire with!

 

The benefit of donating stocks/mutual funds that have increased greatly in value (what are called appreciated shares) benefits the giver and the receiver (the charity). The giver gets to deduct the full value of the appreciated shares they donate to a charity on their tax return. The charity gets the full value of the donation without paying any tax on it. It is a win-win situation. You get to make a big donation without paying tax on anything and the charity gets the full value of the donation to do whatever good work they can with your donation.

 

Last but not least, make sure the charity to which you donate is highly rated by one of the charity rating systems, like Charity Watch so that you are sure your donation is actually going to help the people or cause you desire and not lining the pockets of an unscrupulous individual.

 

What do think? Do you donate to charity and if so make sure to do so before December 31st!

Nothing in this post should be considered to be offering legal, investment, or tax advice. Please consult a professional before employing any strategy discussed.
Brian Wagers

Brian Wagers

Assistant Professor of Emergency Medicine at Indiana University
Brian's academic interests include injury prevention, quality improvement, and global health. He is from Cincinnati, Ohio (go Reds and Bengals). Brian loves to travel, run, and is interested in the intersection of business, medicine, and health policy.
Brian Wagers

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