She is 68, retired, enrolled in Medicare, and collecting Social Security. Watching MacKenzie Scott, the former wife of Amazon founder Jeff Bezos, give away billions of dollars to thousands of nonprofits has sparked something. She wants to make a meaningful gift now, not through a will decades later. Her own gift won’t make headlines the way Scott’s does, but the obvious source, a long-held position in her brokerage account that has more than doubled, can still do real good, and the mechanics of how she gives it matter just as much at her scale as they do at Scott’s.
Most people sell the stock and write the charity a check. That instinct is expensive. For a retiree on Social Security and Medicare, selling appreciated shares triggers two ripple effects unrelated to the gift itself: more of her Social Security benefit becomes taxable, and her Medicare premium can rise two years later.
A version of this scenario shows up often on retirement forums. Someone wants to support a cause, sees a big embedded gain in an old fund, and wonders whether selling will cost them on their tax return. It usually does.
Why selling the stock pulls her Social Security into tax
Social Security uses provisional income to decide how much of the benefit is taxed. Provisional income combines adjusted gross income (AGI), tax-exempt interest, and half of the Social Security benefit. Once the totals cross certain thresholds, up to 85% of her benefit becomes taxable income.
A realized capital gain lands directly in AGI. If she sells $50,000 of appreciated stock with a $10,000 cost basis, $40,000 of gain flows into AGI in one stroke. That single sale can push a larger share of her benefit into the taxable column. The result: she gives the money to charity and still pays tax on Social Security she would otherwise have kept tax-free.
The cleaner move is to donate the shares directly. The charity opens a brokerage account, she transfers the shares in-kind, and the charity sells them. Because she never sold, no capital gain is realized, nothing flows into AGI, and her provisional income does not move. The charity, as a tax-exempt organization, owes no tax on the sale either.
Two conditions matter. The shares must be held more than one year, so the gain qualifies as long-term. And she should give the most appreciated lots, not positions where the cost basis is close to today’s price.
The IRMAA ripple two years out
Medicare’s income-related monthly adjustment amount, known as IRMAA, is a surcharge added to Part B and Part D premiums for higher-income beneficiaries. It looks at modified adjusted gross income (MAGI) from two years prior. A large capital gain in 2026 can push her into a higher IRMAA tier in 2028, raising her premiums for a full year.
The tiers step up at specific income levels, and a single stock sale can cross one. For 2026, the standard Part B premium is $202.90 for beneficiaries with MAGI at or below $109,000 single or $218,000 joint, with the first surcharge tier beginning above those amounts. Donating the shares directly keeps the gain out of MAGI, so IRMAA stays put.
The deduction helps only if she itemizes
If she itemizes, she can deduct the fair market value of the donated shares, subject to the usual AGI limits. For 2026, a new floor disallows charitable deductions below a small percentage of AGI, so a modest gift may yield no deduction at all.
Here is the part worth holding onto: the deduction only helps if she itemizes, while the capital gain avoidance works either way. With the 2026 standard deduction at $16,100 for single filers and $32,200 for married couples filing jointly, many retirees no longer itemize. The Social Security and IRMAA protection still applies to them in full.
This strategy is separate from a Qualified Charitable Distribution, which sends money directly from a traditional IRA to charity and excludes the amount from taxable income entirely. Appreciated shares in a taxable brokerage are the right vehicle for the move described here.
What to confirm before the transfer
A few details determine whether this strategy delivers the full benefit, and they are worth checking before initiating anything.
- The shares have been held more than one year, so the gain is long-term and the full fair market value counts toward any deduction.
- The charity accepts stock transfers. Most larger nonprofits and donor-advised funds do. Smaller organizations may need to set up a brokerage account first, which can take a few weeks.
- The lot carries a real embedded gain. Donating shares with little appreciation wastes the strategy, since she could have sold those without much tax cost.
With the 2026 Social Security cost-of-living adjustment at 2.8%, benefit checks are a touch larger this year, which makes protecting that income from unnecessary taxation more valuable. The hardest mistake to undo is the one that triggers the gain. Once the shares are sold in her name, the tax follows. Once they are transferred to the charity, the tax never appears. A quick call with a tax preparer before the transfer can save more than it costs.
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