Year-end Giving and Tax Benefits
As you do your tax planning, we hope you will consider making good use of the income tax charitable deduction. Your year-end gift can significantly reduce your income taxes while providing meaningful support for the Benedictine community of Saint John's Abbey.
Regardless of your income, in most cases, you can lower the taxes you pay through charitable giving. Of course, the amount of the income tax savings will depend on your tax bracket.
As you know, giving is about much more than tax savings. Your charitable gifts make an important difference in what we are able to accomplish. The following are some of the best year-end gift ideas.
If you itemize, you can lower your income taxes simply by writing us a check by December 31. There is no easier way to garner a year-end charitable deduction. Gifts of cash are fully deductible — up to a maximum of fifty percent of your adjusted gross income. For instance, if your adjusted gross income is $50,000, up to $25,000 of charitable gifts may be deducted this year. Any excess can generally be carried forward and deducted over as many as five subsequent years.
Your residence, vacation home, farm or acreage may have appreciated in value through the years such that its sale would mean a sizable capital gains tax.
By making a year-end gift of this property instead, you would avoid the capital gains tax, and, at the same time, receive a charitable deduction for the full fair market value of the property.
It is also possible to make a gift of your home, farm or vacation home so that you and your spouse can continue to use it for your lifetimes — while you receive a current year tax deduction. Please give us a call for more details.
If you own stock it is almost always more beneficial to contribute stock than cash. This is because a gift of appreciated stock generally offers a twofold tax savings.
First, you avoid paying any capital gains tax on the increase in value of the stock. Second, you receive an income tax charitable deduction for the full fair market value of the stock at the time of the gift.
Charitable Gift Annuities
If you own stock that is fluctuating with the stock market and is paying you little in dividends, a "life-income" gift may be an appropriate year-end gift.
You could transfer the stock to us and establish a "charitable gift annuity" that would provide you with a greater annual return — often between five and nine percent. This income would be paid to you and/or a loved one for life, after which the assets would be distributed outright to us.
Through such an arrangement, you may be able to increase your income and make a meaningful (and tax-deductible) contribution to us at the same time.