Tax Advantaged Giving
Reducing Taxes Through Giving
You are "not bound to choose the pattern [of taxes] which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes."
Judge Learned Hand, 1934
With that observation in mind, we encourage you to consider the tax benefits of charitable giving.
- Expecting a year-end bonus?
- Won the lottery at long last?
- Lump sum payment due to you this year?
Charitable donations made before December 31 are a way to reduce your taxes for this year.
- Charitable gifts are deductible for anyone who itemizes deductions on their tax return. To assure you get the full income tax charitable deduction for gifts of $250 or more, keep all acknowledgment letters and receipts from KCTS and other charities you support. Without documentation, your tax deduction could be questioned.
- Cash gifts are deductible up to 50 percent of your adjusted gross income.
- Gifts of appreciated securities and real estate owned longer than one year are deductible up to 30 percent of your adjusted gross income.
- Pledges actually paid, along with any other cash gifts, count as deductions for the calendar year in which given, less the fair market value of any goods received in return for the amount contributed.
- Deductions in excess of these allowed percentages may be "carried over" for as many as five succeeding years, depending on the nature and extent of your charitable deductions in those years.
Gifts of stock (and certain other securities) can bring extra tax savings to you. See Gifts of Securities for more details.)
By giving an asset you have held for more than 12 months, you will completely avoid paying any capital gains tax and receive a tax deduction for the full value of the asset.
And if you have sufficient cash, you needn't worry about giving up your favorite stocks. You can use the cash to repurchase the same number of shares you contributed, thereby raising your cost basis and improving your tax situation down the road.
Please consult with your accountant, attorney or other professional advisor regarding the applicability of the foregoing information to your particular circumstances.
