Year-End Giving Ideas

As the end of another calendar year approaches you may find yourself with a desire to give to a specific charity or perhaps the need for a tax deduction.

Here, we explore some ideas that both support a charity and reduce your income tax liability, plus a key tax provision that benefits donors and charitable organizations alike.

Gift of your property

Do you have certificates of deposits, stocks or bonds that are producing little or no return? Why not make a gift of these low-performing assets to benefit your favorite charity, and receive a charitable deduction? You can also give your real estate, art or other property.

Gift of your property for income

If you are looking for income in the future, why not make a gift of your property to fund a charitable gift annuity or charitable remainder trust? Your property can be sold tax-free, and you may receive income for the rest of your life. With a charitable gift annuity, this income is fixed so there is the possibility that some of your payment will be tax-free.

Future property gift

The benefit of charitable giving is that there are gifts everyone can make. If you don’t want to give your stock or real estate today, you can still enjoy your property during your lifetime while making a gift through your will or trust. A bequest of your property will provide your estate with an estate tax charitable deduction, which means the savings can go to your loved ones.

Plus, take advantage of this … before it’s gone

The Public Good IRA Rollover Act allows an individual to donate money from their IRA directly to a charitable organization without receiving the distribution as taxable income. The provision first appeared as part of the Pension Protection Act of 2006 and was recently reinstated in the American Taxpayer Relief Act of 2012. However this will expire at the end of 2013.

Individuals ages 70-and-a-half and older can make a Qualified Charitable Distribution of up to $100,000 directly from an IRA to a charitable organization, including the donor’s church or another ministry organization. Here are other details:

• Donations will count toward the donor’s minimum distribution requirements.

• Donations from IRAs are not used to calculate percentage limitations of adjusted gross income (AGI).

• Donor must instruct the IRA custodian/manager to transfer the funds directly to a charitable non-profit organization.

• The donation must be an outright gift (rollovers to gift annuities, charitable trusts, donor advised funds or supporting organizations are not eligible).

• Only traditional IRAs and Roth IRAs are eligible; distributions from SIMPLE IRAs, SEP IRAs, 401(k) and 403(b) plans do not meet the requirements.

Donors who are likely to be interested in the IRA Charitable Rollover are:

• Donors who don’t itemize;

• Donors who don’t need income from their minimum required distribution;

• Donors for whom additional income will cause more of their Social Security income to be taxed;

• Donors whose income level causes the phase out of exemptions; and

• Donors who give at the 50% of AGI deduction limit.

Boyle has been a practicing CPA for over 40 years and works and lives in the Alexandria, LA area. He is director of the health care practice at Daenen Henderson & Company, LLC and can be reached at boyle@dhc-cpas.com.

Daenen Henderson & Company, LLC is also a proud member of the National CPA Health Care Advisors Association. HCAA is a nationwide network of CPA firms devoted to serving the health care industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information contact the HCAA at info@hcaa.com.