Tax-Advantages of Donating to UUFR from Investment Accounts


Please Note:

Changes in the tax code for 2018 may impact how you take deductions. Please consult a tax professional regarding how these changes might affect you.

Required Minimum Distributions (RMD) and Qualified Charitable Distribution (QCD)

Individuals at least 70 ½ years of age, or who inherit IRAs, are required to withdraw a portion of their IRA or other retirement accounts each year and pay ordinary income tax on the amount withdrawn. However, if you transfer all or part of your Required Minimum Distributions (RMD) directly to a charity (UUFR) as a Qualified Charitable Distribution (QCD), you do not have to pay ordinary income tax on that portion of your withdrawal. Your bank or financial manager will be able to get you the correct form(s) for the RMD transfer.  

Be sure to give UUFR a heads up in advance so they can look for the check and let you know if there is any issue with the transfer.

When you then file your taxes, in the income section of the 1040 form, the amount you have sent directly to UUFR is excluded from the taxable amount of your distributions.

Transfers of Appreciated Stock/Shares from a Brokerage Account

At any age, you may be able to reduce your taxes by paying your UUFR pledge by giving shares of stock or mutual funds and claiming the full value of the shares as a charitable deduction while avoiding paying capital-gains tax.

If you have held shares for more than a year and it has increased in value since you bought it, and if you itemize deductions, you can transfer the shares to UUFR (don’t sell it yourself) and take a charitable deduction for the share’s fair market value on the day you gave it to UUFR. This lets you avoid capital-gains taxes on the increase in value over time. UUFR will credit your pledge for the value of the shares.  

Your bank will be able to get you the correct form(s) for the share transfer.  The form will require you to enter specific information about the UUFR brokerage account (Name of account, account number, etc) so you will need to contact UUFR ([email protected]) to get they can look for the needed information.

Be sure to give UUFR a heads up so we can track the transfer and let you know of any problems

Donor Advised Funds (DAF)

An alternative to the direct transfer of shares to UUFR is to transfer the shares to a donor advised fund and then direct the fund to make your pledge payments. Some members find this more convenient and they enjoy the other benefits of using a donor advised fund. Assets may be donated to a DAF, a current year charitable deduction taken, and the donor chooses when and to what charities to donate.