Giving Options

Making Your Giving Count

Like other investments, the key to making the most of your charitable dollars is through careful planning. By taking a minimum amount of time before deciding what to give, when to give, and how to give, you can make a major difference when deciding how much to give. In addition, if you make use of various tax incentives you can stretch your charitable dollars.

Cash is probably the most popular choice when making charitable gifts. Tax benefits are available for such gifts when you itemize deductions on your tax return. Cash donations allow you to eliminate tax on up to 50% of your adjusted gross income (AGI) each year. Any amounts not deductible in the year your gift is made can be “carried over” and produce savings in as many as five future tax years. Your actual savings depend on your tax bracket and other factors. Generally speaking, the higher your tax bracket, the greater your tax savings.

If you are now at the age where you are required to withdraw funds from a qualified IRA account, you may find that using the withdrawal amounts to make charitable gifts can be an excellent way to minimize or even eliminate taxes on the withdrawals. Recently proposed changes in the law may add to the appeal of making gifts from retirement plan accounts. Check with your advisors for the most current information.

Giving Gifts Other than Cash. If you own securities or other property that has increased in value since you have owned it, you may wish to learn more about using it to fund charitable gifts this year.
When you give qualified property that you have owned more than one year, for example securities that have increased in value, you can take an income tax deduction for the full value of the asset, not just the amount you paid for it. Instead of making a gift of cash, it is better to give the security, take advantage of the ability to deduct its full value, and completely bypass capital gains tax that could otherwise be due at the time of sale.

If the value of the securities or property that you wish to donate is less than the original cost, it is usually best to sell the property and donate the cash proceeds. You may then be able to claim tax benefits for both the capital loss and the charitable gift, effectively deducting more than the current value of the asset.

Giving through Life Insurance can allow you to make a gift of assets you no longer need to assure the economic security of loved ones.

If you believe you will owe less in estate taxes, you have sufficiently taken care of loved ones, or if you have life insurance policies that have outlived their original purposes, consider letting them do double duty by using their value to immediately fund a gift.

Giving through your Will can be a convenient way to leave a lasting legacy. After providing for your loved ones, you may decide to give a specific amount, a percentage of your estate, or all or part of what remains after family and friends have been remembered. Professional advisors can help you make your plans or make simple changes to existing wills through the simple addition of a codicil amendment. More information about Legacy Gifts.