When donating stock, most people simply transfer the stock directly to United Way as described below rather than selling it. This allows you to claim a charitable contribution on the day of the transfer to United Way as well as not having to pay the capital gains tax on the securities. United Way will be responsible for any fees related to the sale of the stock.
Below is information on making a gift to the United Way using a stock transfer:
Step 1: Send a letter to your broker to authorize the electronic transfer of stock as a contribution to United Way of Central Maryland. Include the following details in your letter: name of stock, number of shares, expected date of transfer, your mailing address and your work and home phone numbers.
United Way maintains accounts at several brokerages in the region for the purpose of stock transfers. Please click here for a list of our preferred brokers.
Step 2: For acknowledgment and tax purposes, please send a copy of your letter to:
United Way of Central Maryland
c/o Stock Administrator
PO Box 1576
Baltimore, MD 21203
After the stock is received, United Way of Central Maryland will send you a confirmation letter, which may be used for tax purposes. In accordance with IRS guidelines, this receipt will calculate the value of the gift as the mean (average) value of the high and low price of the stock the date it was transferred to United Way of Central Maryland.
Questions may be directed to Kelly Miller, Donor Choice Administrator, at 410.895.1432 or firstname.lastname@example.org.
Income tax laws encourage contributions to public charities like United Way by providing, within the tax code, income tax deductions donors who itemize their federal tax returns.
Donors can make gifts at reduced costs; for example, if you make a cash contribution of $10,000 to United Way, you may claim a deduction of $10,000 on your income tax return. In this scenario, if you are in the 39.6 percent marginal income tax bracket, you will reduce your overall federal tax liability by $3,960.* In effect, you can give $10,000 to United Way at a cost to you of $6,040. Similarly, if your gift was in appreciated stock as shown in the chart, with a cost basis of $3,000 (therefore a gain of $7,000), the cost to you would still be $6,040, which is far better than selling the stock directly and paying the capital gains tax.
Long-term appreciated stock gifts are deductible at their full fair market value for both federal and Maryland income tax. There is no capital gains tax due on the appreciated portion.
The ability to avoid tax on capital gains at both the federal and state level makes gifts of appreciated securities particularly attractive to donors. Of course, any of these contributions will be valuable to our community and will support individuals and families in helping build better lives.
Assumes a $3,000 cost basis on gifted stock (therefore a gain of $7,000).
*There may be additional savings in avoiding Maryland state income tax. Charitable gifts are subject to the deduction limits set by the Internal Revenue Code. Any excess deduction can be carried forward over an additional five years. Additionally, charitable contributions are subject to the phaseout of itemized deductions for certain high income taxpayers. This material is intended to be illustrative only; we always encourage individuals to review their plans with their own tax counsel to ensure that their particular circumstances are fully considered when calculating the tax consequences of any charitable gift.
**Benefit of stock gift to United Way is avoidance of capital gains tax. A copy of the most current financial statement is available upon request by contacting United Way of Central Maryland, Inc. at P.O. Box 1576, Baltimore, MD 21203-1576 or 410-547-8000. Documents and information submitted to the State of Maryland under the Maryland Charitable Solicitations Act are available from the Office of the Secretary of State for the cost of copying and postage.