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INMED Financial Giving Tips
By: Michael J. Searcy, ChFC, CFP®, AIFA®
Ultimately, year-end giving is as easy as (1) making a charitable gift, and (2) saving taxes. Since tax laws intentionally encourage charitable giving, individuals who make their gifts by December 31 and file itemized tax returns can significantly reduce their income taxes for the year in which the gift is made. Here are four tips to help you make the most of your year-end giving:
- Talk to your advisor. Before making any significant gifts to INMED, or to any other nonprofit for that matter, you should have your CPA, attorney, or other advisor help you understand the impact of your gift on your income tax return and estate.
- Do your giving early. This is especially true if you want to make a gift of non-cash assets (stock, real estate, etc.). It also applies to life-income gifts (gift annuities, trust arrangements, etc.).
- Calculate your income. Take the time to do some planning while you still have the opportunity to make a year-end gift. Try to get a handle on your tax liability for the year. Did your unearned income increase? Did you sell any appreciated assets? Will you owe more taxes? This alone may motivate you to increase your giving before December 31.
- Review your stocks. Look at the stocks you have held for more than a year. Which ones have appreciated the most? It may be prudent for you to make your year-end gift using one or more of these stocks. Here's why: If you sell the stock, you will incur capital gains tax on the appreciation. However, if you gift the stock you get a charitable deduction for the full amount of the stock, just as you would if your gift was made with cash and you are not subject to the inherent gains associated with the stock. If you can't use all of the income tax charitable deduction resulting from the gift in the current tax year, you can carry it forward for up to an additional five years. Such gifts are deductible up to 30 percent of your adjusted gross income.
