Are You Managing Your Charitable Giving Wisely
Together, let’s start the year correctly. Whether you give $100 a year or $100,000, you get a tax break. Contact us and discover Multiple Ways you can manage and optimize your charitable giving program. 1
If you got caught short in 2016, let's make sure it doesn't happen again
Charitable donations are deducted in the year “made”, this is why so many nonprofits solicit donations in December. But there are ways to take current income deductions for charitable gifts you make in the future: charitable lead trusts and charitable remainder trusts. These are especially useful for those making substantial donations. 2
A charitable lead trust provides an income stream for a certain number of years to a designated charity. When the time ends, the property held in trust reverts to the owner or a beneficiary. A charitable remainder trust does the opposite: It provides a stream of income to the donor or designated individuals for a certain number of years or for life, and when the time or life has expired, the property goes to a charity. These trusts can save you income as well as estate and gift taxes.
If you itemize deductions, you typically can deduct charitable contributions in an amount up to 50 percent of your adjusted gross income. But you have to make sure you're giving to a bona fide charity, such as one of the following:
- The state or federal government.
- An organization created exclusively for charitable, religious, educational, scientific or literary purposes or for the prevention of cruelty to children or animals.
- A church, synagogue or other religious organization.
- Veterans' organizations.
- Volunteer fire company, civil defense organization, fraternal society or nonprofit cemetery.
Charitable donations are deducted in the year “made”, this is why so many nonprofits solicit donations in December. But there are ways to take current income deductions for charitable gifts you make in the future
A Foundation Alternative
Of course, you can also set up a charitable foundation, but those are prohibitively expensive for all but the extremely wealthy. However, the philanthropic-minded can give to a donor-advised fund. Basically, you make a donation to a sponsoring organization, at which point you can take the maximum deduction allowed by law. From then on, you can advise the organization to make donations to any legitimate charities from the account you opened. Meanwhile, your donation is invested and growing tax-free.
What's the right way for you to make donations, and what tax advantages and costs come with these choices? Contact us at Morris+D'Angelo. We're happy to discuss how to apply Charitable Giving and Planning strategies to apply to your personal wealth or your business. We can help you stay ahead and on track with your Personal and Business Goals.
Photo: Jane Rahman, hands via Flickr↩