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Photo: wk1003mike (Shutterstock) If you are looking to give to a good cause and you own a portfolio of stocks, consider donating stocks directly to charity instead of cash. You’ll avoid the capital gains liability you’d owe on the stock if you sold it, and it will maximize the tax deduction you’re allowed to take. Here’s how it works. Donating stocks saves you money When you sell stocks in a brokerage account, you owe taxes on any capital gains based on the difference between the sale price and what you paid for the stock when you first invested in it. The taxes are based on your taxable income and how long you’ve owned the stock: Short-term capital gains tax applies to profits on an asset sold within a year or less. Short-term capital gains tax rates are the same as your usual tax bracket —up to 37%. Long-term capital gains tax applies to profits on a sold asset held for longer than a year. The tax rates are 0%, 15%, or 20% depending on your taxable income and filing status . As you can see, long-term capital gains tax rates are more favorable, which is why holding onto a stock for more than a year is generally a good idea for most investors (unless, of course, the investment does not otherwise align with your investing goals). Here’s the twist, though: by donating stocks directly to charities, you avoid all of the capital gains tax described above for the tax […]