With the April tax deadline fast approaching, Americans start to realize we maybe should have made additional charitable gifts in 2016 to receive a more robust tax deduction. The good news is, with a little planning, you can turn that realization into next year’s reality. It’s never too early to plan ways to maximize the impact of your charitable gifts and achieve a favorable tax outcome for 2017 at the same time.
Here are three effective strategies to share with those seeking to simplify their charitable giving and reduce their overall tax burden.
1. GIFT APPRECIATED SECURITIES:
A gift of appreciated securities that have been held longer than one year enables you, the donor, to be eligible for an immediate income tax deduction based on the asset’s fair market value on the date of the gift. By donating appreciated securities you avoid paying capital gains tax on the appreciation in the value of the shares donated.
2. OPEN A DONOR-ADVISED FUND:
Establishing a Donor Advised Fund allows you to make a gift this year, receive a current year tax deduction, and then, distribute the funds to selected nonprofits in future years. Gifting appreciated securities to establish and maintain a Donor Advised Fund is highly recommended. You can actively participate in the grantmaking process by recommending grants from your Donor Advised Fund to support your favorite nonprofit charities and causes. Plus at the end of the year, you have a complete and consolidated record of all the support you have made at your finger-tips. This makes tax time a breeze.
3. ESTABLISH A CHARITABLE GIFT ANNUITY:
If you open a Charitable Gift Annuity, you will receive both an immediate income-tax deduction and partial income tax-free payments. The capital gains tax on a portion of the gift (assuming the use of appreciated stocks) is eliminated, and the rest is spread out over the term of the gift annuity. The remainder of the annuity, upon your death, will establish an Endowment at CCF to support the charitable organization you have specified.
For more assistance with the planning of your charitable giving, please give us a call at 651.389.0300. We’re happy to visit by telephone or schedule a time to meet in person.