Donations in General

Giving to charity is tax deductible if you itemize deductions. Check your last tax return to see if you itemize: an attached Schedule A tells you that you did. Cash contributions lower your taxable income dollar for dollar, resulting in a tax savings of: $ contributed * marginal tax rate.

Donating Stock

Gifts of stock can make sense for a charity and donor, but from a tax perspective, there's a clear do/do not rule. If you have owned a stock for more than a year and it has appreciated in value, donating it allows you to deduct the full value without paying taxes on the appreciation. If you sold the stock and donated the cash, you'd have to pay the capital gains rate on the sale. Thus the 'do' rule: donate appreciated stock. If your stock has lost value, sell it and donate the cash. If you donated the stock itself, you would not be able to deduct the capital loss. Thus the 'do not' rule: do not donate stock that has lost value. 

Past Year-End Planning Entries