Betterment does not currently provide charitable donation cost basis information, but we may provide it in the future. However, the way Betterment’s charitable gifting product works means that the basis information is not relevant for tax purposes.
In general, if you donate shares that have appreciated in value since the time of purchase and that you have owned for more than one year (which is the case when you donate through Betterment), the fair market value on the date of donation is used to calculate your itemized deduction. If you donate shares that you have owned for less than one year or shares that have gone down in value since the time of purchase (which you cannot do through Betterment), the cost basis or the fair market value, whichever is lower, will be used to calculate the deduction for which you are eligible. Again, Betterment optimizes tax deductions for charitable donations by only allowing our customers to donate appreciated investments held for over one year.
To help you complete the charitable donation section of the TurboTax flow, we’ve provided an example:
- You donated long-term appreciated shares on December 15, 2017 worth $1,500. TurboTax prompted you to list the date you acquired those shares and the cost basis. You are unsure of the date, but you know you were only able to donate them through Betterment (which means they were held for over one year). TurboTax wants to confirm you purchased these shares more than one year prior to the date of donation so entering any date that is more than one year prior (for example, September 15, 2016 which is more than one year earlier than December 15, 2017) is sufficient.
- TurboTax then prompts you to list cost basis and you do not have it readily available. Because you donated through Betterment you know that these were appreciated shares. Entering any amount less than market value to confirm the shares were appreciated shares would be sufficient (for example, $1,262, which is less than $1,500, the donated value).
Here is a screenshot illustrating the example above:
Betterment is not a tax advisor, and the information provided here should not be construed as tax advice. It should only be used for informational purposes.