Posts filed under 'Charitable Giving'
December 26th, 2007
Wendy M. Blair, CFSC
With only a couple of weeks remaining in 2007, a check list of things to consider may be helpful for year-end planning.
- Investments: Do you have your cost basis records updated on your non-retirement accounts? If so, is there any tax-loss harvesting that is available to you in your portfolio? Tax-loss harvesting is realizing losses to offset realized gains. Consider re-balancing the investments in all of your portfolios (both retirement and non-retirement accounts). Simplistically, rebalancing forces you to sell high and buy low. Do you have children between the magical ages of 18 and 23, then? If so, their capital gain tax rate is going up in 2008, so consider taking gains for this age group in 2007.
- Planning: When was the last time you reviewed your last will & testament and trust? When was the last time you made up a current list of all of your assets with current values? How are your assets titled? Is it time that you updated your estate plan?
- Gifting: Would you and others benefit financially and emotionally by making gifts for 2007? Annual exclusion gifts or charitable gifts?
- Retirement Accounts: Are you maximizing your contributions? If not, could your contributions be increased for 2008? Are you already retired and over 71? Have you taken your required minimum distribution for 2007? This must be done by December 31st.
- Clean-up: While you are getting all of the above in order, are there records and papers that could be thrown out? Reorganized?
Enjoy what you have accomplished and look forward to a prosperous 2008!
December 14th, 2007
Tracy S. Beard, CFP®
Are most charitable gifts tax motivated? While we generally associate charitable gifts with tax deductions, the answer is no. After all, when an investor makes a gift to a charity, they are generally giving away 100% of the asset. This is the equivalent of a 100% “tax.” Now for the good news… In most cases, investors do get a tax deduction for making a gift to a qualified charity. Taking advantage of the tax benefit requires a general understanding of charitable gift rules. I had the opportunity last week to speak with Dan Loescher of Loescher & Associates regarding the charitable gift rules.
SAVANT – What are the general rules for deducting gifts made to a qualified charity?
Loescher - Individuals, who itemize their deductions, are able to obtain an income tax deduction and benefit by making a charitable contribution of cash or property. Under new rules for 2007, each contribution must be evidenced by a receipt or other contemporaneous record in order to claim the deduction. The amount of the deduction for gifts of property is the fair market value of the property at the time of the gift. A letter evidencing a contribution is required to be provided to a donor who makes a contribution of $250 or more.
SAVANT – Are certain assets better to gift to a charity?
Loescher - We encourage our clients to consider gifts of appreciated securities in lieu of cash for larger gifts. In this manner, the donor does not have to sell the security or pay the income tax on the gain to raise the money for the contribution. The appreciation is not taxable on the direct transfer.
In addition, you may have read that individuals who are older than 70 1/2 may transfer funds directly from an IRA account directly to charity. The amount transferred is not includible in the donor’s income nor is an income tax deduction obtained.
SAVANT – What are the most common mistakes made by individuals making charitable gifts?
Loescher - For 2007, the new rules require a receipt for every gift. This means that cash dropped in the Salvation Army kettles may not be claimed as a tax deduction nor may the cash pulled out of your pocket in church. This will be a surprise for many.
Certainly, one of the other big areas of confusion is the value of the household items given to Goodwill or the Salvation Army. The value for the income tax deduction is not what the donor paid for the item but rather the garage sale price or the price that the charity obtains on sale.
Finally, significant gifts made in cash forfeit the opportunity to utilize the capacity to transfer appreciated securities.
* Dan is a Certified Public Accountant specializing in working with charitable organizations and estate & taxation matters.
December 12th, 2007
Tracy S. Beard, CFP®
Do you want to simplify your charitable giving plan? Do you want the benefits of a family foundation without all of the complicated regulations? If you answered yes, you may want to consider using a Donor Advised Fund (DAF).
DAFs have become very popular in recent years. The concept is quite simple. An investor (donor) can open an account at a sponsoring company. Fidelity and Vanguard each offer DAF accounts. Our local community foundation also offers a DAF. Once the donor opens and names the account, they can fund it with cash or appreciated securities. Some companies allow other assets to be donated into the account. Since the gift fund itself is a qualified charity, the donor gets a tax deduction when money funds the account. Later, when the donor identifies a cause they would like to support, they request a grant be made from their account. The sponsoring company researches the charity to make sure it is an approved charity. As the name indicates, the fund is only donor advised. The donor of the account advises the sponsoring company to make the grant. Technically the sponsoring company is not required to accept the donor’s recommendation. However, they usually make the recommended grants as long as the charity is qualified. There are a number of advantages offered by a DAF. They include:
- Easy to make donations. Most firms accept grant requests online.
- Donors can fund the accounts with appreciated securities. This reduces the need to transfer appreciated securities to each separate charity.
- Grant histories are available online to track gifts.
- Costs are significantly less than family foundations.
- Donors can add money at any time. This allows for additional contributions during higher tax years.
Want to learn more? For further reference, please review the attached article on donor advised funds at the following link:
http://finance.yahoo.com/expert/article/moneyhappy/55741;_ylt=AmyX75Uo2WtqtJHN__l_W29O7sMF
December 10th, 2007
Tracy S. Beard, CFP®
I will never forget the year Mom received “Buttercup.” She had religiously collected every ornament from Hallmark’s Mary’s Angels Collection. But she missed Buttercup one year. She had come to accept the fact her collection would never be complete. When she opened her gift and identified the lost treasure, she cried tears of joy.
Ask any child if they would prefer to get a gift or give a gift, the answer becomes abundantly clear. However, as we mature into young adults and develop our own unique value systems, only then do we truly begin to understand the value of gift-giving.
For many of us, the holiday season reminds us of our desire to help those around us who are truly less fortunate. Here are a few tips if you plan on elevating your gift-giving during the holiday season:
- Consider giving to organizations or institutions that have had a positive impact on your life.
- Giving is not just about opening your pocketbook. Offer your talents or skills to a needy cause. Teaching a class or volunteering at a soup kitchen can add tremendous value to a community.
- Consider including your children in your gift-giving plan. Have them pick out a present for a needy child.
Mom received Buttercup and completed her collection, however, we received a gift far greater than the price of the ornament. We received the joy of our mother’s smile.
As you enter this holiday season, go ahead and be selfish. Give back to your community and warm your heart.
This is the first part of a series on charitable giving. Stay tuned for next blog that will identify a unique tool to simplify your charitable giving.
Wendy M. Blair, CFSC
