How much should I donate to charity to offset $150k in short-term capital gains tax?

Thanks for this info. To clarify, I don't want to personally benefit from the charity funds - I genuinely want to help disabled folks in my community. I just wasn't sure if there were rules about donating to a charity I've founded myself. Would I still get the same tax deduction as I would donating to any other 501(c)(3)? Also, with the 60% AGI limit for cash donations, does that mean I could potentially donate up to $90k (60% of $150k) and deduct that full amount from my taxable income?

Yes, you can still claim deductions for donations to a charity you've founded, as long as the organization truly operates as a legitimate charity and you don't receive benefits beyond reasonable compensation for actual work. The IRS looks at substance over form, so the charity must be genuinely independent with proper governance. For your calculation, it's important to note that the 60% limit applies to your entire AGI, not just the capital gains. So if your AGI is $150k in capital gains plus any other income you've earned this year, you could potentially donate and deduct up to 60% of that total amount. Just remember that while this reduces your income tax, it doesn't eliminate it completely since you're still giving away actual money that exceeds the tax you would have paid.

It's different from a CPA because it focuses specifically on analyzing your documents and showing you different tax scenarios rather than general advice. You can actually see exact calculations for different donation amounts and how they affect your specific tax situation. It's more interactive than just getting advice. The tool definitely handles complex situations including securities donations and RSUs - that's actually one of its strengths. When I used it, it showed me the advantage of donating appreciated securities directly versus selling them and donating cash. For 2025 tax laws, they keep the system updated with current rules, so it's working with the latest information.

How does this service compare to just talking to a CPA? I'm always skeptical of these online tax tools especially when dealing with complex situations like founding a charity. Do they actually give personalized advice or is it just generic calculations?

I'm wondering about this too. My situation is similar but involves restricted stock units and donations of appreciated securities instead of cash. Would this tool handle that level of complexity? Also how accurate is it with the new tax laws for 2025?

It's different from a CPA because it focuses specifically on analyzing your documents and showing you different tax scenarios rather than general advice. You can actually see exact calculations for different donation amounts and how they affect your specific tax situation. It's more interactive than just getting advice. The tool definitely handles complex situations including securities donations and RS

How does this actually work? I've literally never been able to get through to a human at the IRS. Do they just keep calling for you or something?

This sounds too good to be true. The IRS is ALWAYS impossible to reach. I spent 9 hours on hold last tax season trying to sort out a charitable contribution issue. Are you sure this isn't some scam where you're talking to someone pretending to be from the IRS?

They use a system that navigates the IRS phone tree and waits on hold for you. When an actual IRS agent picks up, you get a call connecting you directly to that person. It saves you from having to stay on hold yourself for hours. This is definitely connecting you with actual IRS representatives, not imposters. The company doesn't get on the call with you - they just handle the hold time and then connect you directly to the official IRS line once someone picks up. That's why it's so useful - it's your direct conversation with the real IRS, just without the ridiculous wait times.

This is really helpful. I didn't realize there were such strict rules about self-dealing. If I start the charity but only take minimal compensation for actual administrative work, would that avoid these issues? Also, do you know if there's a specific percentage of my AGI that makes the most sense for charitable donations from a tax perspective? Is there a point of diminishing returns?

Reasonable compensation for actual services you provide to the foundation is allowed, but the key word is "reasonable" - it needs to be comparable to what would be paid to an unrelated person for similar work. Having an independent board determine compensation helps establish this. For your second question, there isn't really a magic percentage that's ideal for everyone. The tax benefit is proportional to your donation up to the AGI limits (60% for cash to public charities, 30% for private foundations). You'll get the same marginal tax benefit whether you donate 10% or 50% of your AGI, as long as you're within those limits. Remember though, you're still giving away more money than you'd pay in taxes, so there's always a net financial cost. The "optimal" amount really depends on your personal charitable goals balanced against your financial needs.

This is super important. I made this exact mistake last year and it cost me thousands in unexpected taxes. I thought all 501(c)(3)s were treated the same for tax purposes, but they definitely aren't. My own foundation was classified as a private foundation because I was the only donor, which meant my deduction was limited to 30% of my AGI instead of 60%.

This is exactly what I was looking for! I had no idea donor-advised funds existed. The ability to get the immediate tax deduction while taking time to research the best organizations sounds perfect for my situation. Do you know if there are any restrictions on how long I can take to distribute the funds from a DAF? And can I recommend grants to smaller, local disability organizations that might not be well-known, or do they have to be from a pre-approved list? Also wondering about the investment growth aspect - if I donate $90k this year but the investments grow to $100k over the next few years, can I distribute that full $100k to charities?

DAFs are really flexible - there's typically no time limit for distributions, so you can take years to research and decide where to donate. Most DAF providers allow you to recommend grants to any IRS-qualified 501(c)(3) organization, not just from a pre-approved list. They'll do due diligence to verify the charity's status, but you have a lot of freedom in choosing recipients. And yes, any investment growth in your DAF account can be distributed to charities! So if your $90k grows to $100k, you can grant out the full $100k. Just remember that you only get the tax deduction for your original contribution ($90k in this case), not the growth. One additional benefit for your situation - you can also donate appreciated securities directly to a DAF instead of cash. If you have stocks or crypto that have gained value, donating them directly avoids capital gains taxes entirely while still giving you the charitable deduction. This might be even more tax-efficient than selling your positions and donating cash.

This is really valuable information about the carryforward rules. I hadn't considered the flexibility that gives me for planning. One question though - when you mention donating appreciated assets directly, how does that work practically? Do I need to transfer the actual shares to the charity, or can I work through a donor-advised fund for this? And if I have a mix of short-term and long-term positions, I assume it makes more sense to donate the long-term holdings since they'd be taxed at capital gains rates rather than ordinary income rates if I sold them? Also wondering if there are any minimum holding periods for securities donations to get the full fair market value deduction.