Year End Tax Considerations for Charitable Gifts
April 15 – Tax Day – is still a few months away, but now is a good time to analyze where you are and act before the end of the year if you want to save on your tax bill.Many people have a disdain for taxes, but the U.S. government gives taxpayers a way to reduce their tax burden if they make gifts to qualified charities, like the congregations and ministries of the Christian Church
(Disciples of Christ). These gifts can give the taxpayer a charitable income tax deduction, thereby reducing the amount of tax owed.There’s many ways to do this:
Outright gift of cash
Making an outright gift of cash is typically the easiest way. Writing a check to charity is simple, efficient and direct. The receipt, along with the canceled check, serve as evidence the gift was made.
Gift of appreciated stock
Giving appreciated stock not only allows for a charitable income tax deduction, but the donor also bypasses any capital gains tax on the appreciation of the stock. But beware: the stock must be held for at least one year and one day – considered “long term” – to have the capital gains taxes bypassed. If less than that period, the gift is valued only at the original cost of the stock, called “cost basis,” to the donor.
Consider a Life-Income Gift
These types of gifts, typically in the form of Charitable Gift Annuities or Charitable Remainder Trusts, provide a way for a donor to make a gift and receive a charitable income tax deduction for part of the gift, while retaining a stream of payments for life or a certain number of years. At the end of the terms of the contract, a gift would go to the designated organization.
To learn more about these particular types of gifts, contact the Christian Church Foundation, which provides these types of gift instruments to Disciples. To learn more, call the Foundation at (800) 668-8016 or visit the Foundation website at www.disciples.org/ccf and click on the “Planned Giving” link.
Watch out for scams:
Be wary of charities with similar sounding names. It is common for scam artists to impersonate charities using bogus websites and through contact involving e-mails, telephone, and social media. You can verify the legitimacy of the charity on the IRS website, www.irs.gov, using the Exempt Organizations Select Check search tool.
Talk to your Tax Consultant or Financial Planner
We recommend discussing your year-end planning that relates to charitable giving with a trusted financial professional in order to receive the maximum benefit available by law. What you save on your taxes gives you that much more you can share.