Before the Year is Over. . .
The holidays probably triple your "to-do" list, but add one more item: make your charitable gifts. If you donate before year's end you will see a tax break for 2009 when you itemize deductions on your federal tax return.
Timing is Key
The year's end is your last opportunity to reduce current-year income taxes. Some gifts can provide particularly attractive tax benefits, while others can combine these benefits with an income stream for life. Here are some smart year-end giving strategies:
Prepay a Pledge:
Consider prepaying a pledge due next year. Or make a larger contribution this year.
Give Appreciated Securities:
When you give appreciated securities you've held more than one year, you can claim deductions for their full fair market values and avoid any tax on appreciation. The fair market value for securities is generally the mean between high and low on the date of delivery. For mutual fund shares, their fair market values are their redemption prices.
Make a Gift of Individual Retirement Account Savings:
Through December 31, 2009, you can make an outright gift of up to $100,000 from a traditional IRA. You must be 70 & ½ or older and need to instruct your IRA custodian to directly transfer your gifts to a qualified charity. You do not get a charitable income deduction, but the amount you transfer is not taxable income to you. If both a husband and wife have IRAs, each may take advantage of this allowance to the fullest extent. This means that a couple could conceivably make a gift of $200,000.
Although this law does not allow charitable gifts from 401(k), 401(b) and other retirement plans, amounts distributable from these plans generally can be rolled into an IRA and then donated to charity as described above. Dow Rummel Village will make it very easy to complete the gift by coordinating the IRA charitable rollover with your IRA custodian.
Timing is Key
The year's end is your last opportunity to reduce current-year income taxes. Some gifts can provide particularly attractive tax benefits, while others can combine these benefits with an income stream for life. Here are some smart year-end giving strategies:
Prepay a Pledge:
Consider prepaying a pledge due next year. Or make a larger contribution this year.
Give Appreciated Securities:
When you give appreciated securities you've held more than one year, you can claim deductions for their full fair market values and avoid any tax on appreciation. The fair market value for securities is generally the mean between high and low on the date of delivery. For mutual fund shares, their fair market values are their redemption prices.
Make a Gift of Individual Retirement Account Savings:
Through December 31, 2009, you can make an outright gift of up to $100,000 from a traditional IRA. You must be 70 & ½ or older and need to instruct your IRA custodian to directly transfer your gifts to a qualified charity. You do not get a charitable income deduction, but the amount you transfer is not taxable income to you. If both a husband and wife have IRAs, each may take advantage of this allowance to the fullest extent. This means that a couple could conceivably make a gift of $200,000.
Although this law does not allow charitable gifts from 401(k), 401(b) and other retirement plans, amounts distributable from these plans generally can be rolled into an IRA and then donated to charity as described above. Dow Rummel Village will make it very easy to complete the gift by coordinating the IRA charitable rollover with your IRA custodian.
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