Tax Savvy Giving at Year’s End
By The Rev. Dr. Ralph Graham
In this season so full of wonder and blessing, have you given thoughtful consideration to a significant year-end charitable gift? You may be grateful for the blessings that God has bestowed on you and yours. Your recognition that we are “blessed to be a blessing” may have encouraged you to believe that now is the appropriate time to make a meaningful gift to Trinity.
Changes in Federal Tax Law One popular method of offsetting taxable income – charitable deductions – has become a point of some confusion among American taxpayers as a result of the recent changes in the laws. The good news is that you can still avail yourself of this tax saving incentive if all your itemized deductions exceed the standard deductions for 2019: For married couples filing jointly it is $18,350. For heads of households and single people, or married individuals filing separately it is $12,200.
Tax-Wise Giving Strategies Trinity people are valued for their extravagant generosity in giving their time, talents and treasure to ensure particular ministries that are dear to their hearts continue to flourish. If you give in any or all of these ways, the tax deduction that you may receive may not factor into your giving plans. That being said, if you are making a charitable donation of money or property you might as well receive the tax benefit. The following are some ideas to consider when making a charitable contribution.
Give Cash This is the most common form of charitable gift, and most often takes the form of checks and electronic transfers. If itemizing deductions, gifts of cash to public charities may be used by donors to reduce or eliminate federal income tax.
Bundling Your Gifts Because the new tax laws have a higher threshold for itemizing charitable deductions, you can work with the new provisions by bundling two or more years of giving into one year to trigger deductions and increase your tax savings.
Gifting Highly Appreciated Long-term Assets such as stocks, mutual funds or real estate allow donors to to bypass capital gains taxes on their appreciated value and receive a charitable deduction on the market value up to 30% of your adjusted gross income, and you can carry the deduction forward up to an additional five years.
Giving with a Donor Advised Fund is an effective and flexible tool. Think of it as a charitable savings account that lets you make gifts, earn tax deductions and benefits, and direct gifts to the cause of your choice. You can claim a deduction for contributions to your fund now, even though distributions from the fund might be not be made until future years.
Giving from Your IRA RMDs Leverage a charitable contribution as part of a Required Minimum Distribution from an IRA. This allows you to avoid taxes from what would otherwise be income, because the RMDs in these instances effectively serve as a tax-free donation, provided they go directly to a qualified charity. Because this strategy does not require you to itemize, you can still use the standard deduction on top of it. You must be 70 ½ years old to qualify; annual limit is $100,000.
Endowment Gifts Donors may make endowment gifts either to Trinity’s general endowment fund, or they may create an endowment whose income is restricted to a specific ministry that may be unique to the donor. Trinity’s general endowment fund is an invested account for which the principal has been restricted in perpetuity by the donors and the income that the fund produces is available to Trinity for use in any of its ministries. When a donor makes a gift to the general endowment fund, the donor’s gift is commingled with the general balance and is separated from any identity with the donor. The general endowment fund is very important to Trinity. It provides a financial foundation and an annual stream of income that supports Trinity’s ministry in perpetuity. Because the income generated by the general endowment fund is unrestricted, it may go into the budget without being associated with any particular expenditure.
Consult Your Advisor Before making a significant gift to a charity, talk with your CPA, attorney, or other advisor to ensure you completely understand the impact on your finances and estate. Remember the Texas Presbyterian Foundation, with its extensive technical knowledge, is always available to assist you and answer your questions regarding your contemplated gift. Phone: 1-800-955-3155, 6100 Cowell Blvd #250, Irving, TX 75039.
Remember to Give Early Complete your gift by December 31, 2019. First explore the possibilities of your employer’s matching gift program. A gift by check is complete when mailed (post-marked) to the charitable recipient, even if not cashed until the following year. Gifts by credit card are complete when your credit card account is charged. Gifts of stock or real estate can be complicated. Don’t wait until late December to make these gifts!
Dr. Graham holds an MBA in finance and has over 20 years’ experience in funds development, with a specialty in planned giving, with Trinity University, Lyon College and Presbyterian Border Ministry.
Note about Year End Giving Statements
Interim Giving Statements were sent out in early November via email with a link titled, “View your giving statement.” Please visit this link from your desktop or laptop, not a mobile device, to view a PDF of your Interim Giving Statement.
Final Year End Giving Statements will be sent in January using this same process. A hard copy of the Interim Giving Statement and/or the Year End Giving Statement may be provided by request. If you have questions or concerns, please submit your question below.