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Saint Agnes Consolidated Education Fund
Giving at Year-End
The last months of the year traditionally offer a time of reflection and review of the year's finances. Both as individuals and as organizations, we also look to the future.
The thoughts in these pages will help you make the best choices in order to give most effectively now or at any time of year.
Your Tax Rate Can Mean Greater Savings
Charitable gifts offer one of the few ways to reduce your tax bill in a way that is totally within your control.
Why? Because charitable gifts are generally exempt from taxation for those who itemize their deductions. The higher your effective tax rate, the more you can save. Some people who find more of their Social Security income subject to tax may also find increased benefits from their gifts this year.
Congress thus allows you to decide where you would like your dollars spent rather than having them distributed by government through income taxes.
Deciding What to Give
Cash is deductible up to 50% of your adjusted gross income in any year.
If, on the other hand, you have stocks, bonds, mutual funds, or certain other properties that have increased in value since you have owned them, they may make especially attractive gifts.
"Appreciated property," if held for longer than one year, may be given with the benefit of saving taxes twice.
How can this be possible? First, you may take a deduction for the full current value of the property—not just the amount you paid. Second, you completely bypass capital gains taxes, which would be due if the property were sold.
For example, suppose you own mutual funds worth $1,500 for which you paid $300 several years ago.
If you sold this investment, capital gains taxes as high as 20%, or $240, could be due. You would then have $1,260 remaining.
If, however, you gave the securities this year, you would be allowed to deduct the full $1,500, resulting in income tax savings of as much as $594. Added to the capital gains tax savings, the result could be a $1,500 gift for an after-tax cost as low as $666.
You may give and deduct appreciated property up to 30% of your adjusted gross income in any one year.
Substantiating Gift Value
To make sure you receive full benefits for your gifts, it is more important than ever to keep acknowledgments among your records. Failure to do so could result in the disallowance of your deduction.
If You Don't Itemize
The timing of some deductions is within your control. If you do not have enough deductible expenses to exceed the standard deduction, you can concentrate (or "bunch") your deductions in alternate years. That way, you may be able to itemize in some years.
Consider making larger charitable gifts in particular tax years when they will be deductible.
Arrange Now to Give Later
As you review your finances, remember that your long-range plans can include a charitable dimension, as well.
Your will, living trust or other estate planning tools can include charitable dispositions. You may also be able to supplement your income and enjoy other benefits while giving.
A Quick Summary of Charitable Giving Tips
- Charitable gifts made by December 31 are deductible and can reduce or eliminate the impact of tax
increases.
- Giving appreciated property rather than cash can bring you greater tax savings. By avoiding the capital gains tax, you save twice.
- To give securities, contact your investment advisor as early as possible. He or she can help you make the transfer. We can provide more information, too.
- To ensure full tax benefits, keep all acknowledgements of gifts and gift amounts you receive in letters from charitable recipients.
- Giving through long-range financial planning vehicles can be convenient and economical.
- Ask your advisor about the methods of giving most advantageous to you.
Effective planning of your charitable gifts makes it possible to participate in our programs this year and in the future. Call or write for more information. We will be pleased to assist you and/or your advisors as you consider your gifts this year.
For more information regarding donations to the fund please phone (715) 682-7620 or direct your inquires to:
Saint Agnes Consolidated Education Fund
P.O. Box 132
Ashland, Wisconsin 54806
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