 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Maximizing Tax Benefits from Charitable Gifts (Part 2)
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
To coin a popular phrase of our culture, tax deductions “are a good thing.”
When it comes to charitable giving many of us probably don't have a good understanding of just how much the federal
government allows us to deduct on our federal tax return. You might be pleasantly surprised to know that the maximum
allowable deductions are really quite favorable for the taxpayer. It would seem that our government has determined
that it is indeed productive to encourage Americans to generously support charity ... I think our founding fathers
would approve.
Each person who itemizes deductions may annually donate, and in turn deduct, up to 50% of their adjusted
gross income. While most Americans in a typical year would not reach this limit there are times in one’s life when
charitably minded people might consider making a large gift in a given tax year. Circumstances such as selling
a business, receiving an inheritance, selling property, or cashing in stock are examples that might motivate one
to make an unusually significant gift to charity. External circumstances such as a local major fund drive for a
building campaign or some other charitable purpose might pique your interest in making a one-time significant charitable
gift.
If you do make a major gift to charity you need to understand the applicable rules.
This will assure the maximum benefit of your charitable tax deduction is realized. Earlier I referred to “adjusted
gross income.” Adjusted gross income includes all your wages, interest, capital gains, dividends, and other income.
There are "above the line" subtractions from the total which some pension and IRA payments, alimony,
and other adjustments. After adding up all income and subtracting all “above the line” adjustments the remaining
amount is the adjusted gross income (AGI). It is allowable to deduct up to 50% of this amount in a given tax year.
If your AGI is $60,000 then a deduction of up to $30,000 is permitted. If a person with $60,000 of AGI contributes
more than $30,000 in a given tax year, the excess above the allowable deduction may be carried forward and deducted
in a future year or even future years (up to a maximum of 5 years). You should consult a financial professional
regarding your individual circumstances. Gifts of other than cash are subject to more restrictive deduction parameters.
As we have discussed in the past, the charitable deduction in essence reduces what your charitable gift really
is costing you in terms of net outlay. But more important than the deduction is the satisfaction of knowing that
your gift is making our world a bit better place in which to live and raise our families and that’s a feeling that
truly is .... a good thing.
The Union County Foundation encourages you to consider your present and future charitable goals. The Foundation
is equipped to help you achieve these goals by providing: planned giving and estate planning resource information,
charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618,
email us, reference our website, or stop by our Marysville office at 126 N. Main St. We are committed to helping
you.... “preserve your footprint in time.” |
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