tax strategies to maximize benefit to you, your family & prh
Charitable Giving – a note from PRH’s board of directors
In addition to the intrinsic personal satisfaction that a donor receives from supporting a worthwhile cause, supporting an IRS-qualified 501(c)(3) charity like Poodle Rescue of Houston can offer significant financial and estate planning benefits.
As year-end approaches, please consider donating to Poodle Rescue of Houston.
Our IRS 990 forms and accomplishments reports, available on our website, show that great results are achieved and administrative overhead is extremely low at less than 2% (CPA costs for payroll and the 990 processing).
Your donations go to benefit dogs. No PRH officer or director has ever benefited financially.
In fact, PRH’s directors are among the biggest donors and most dedicated volunteers.
However, as a private charity we receive no government funding, and our expenses – particularly medical expenses – routinely exceed adoption revenues. Simply put, we cannot continue without your help.
Please join us and let’s continue saving dogs.
The tax and financial planning material below is excerpted, with permission, from Patricia A. Guter’s book, Get Your Head Out of Your Assets (2014, PG Publishing). Ms. Guter is an attorney and Certified Financial Planner who specializes in strategies for charitable giving. She can be reached at [email protected].
While donations made with cash or cash equivalents (credit card, gift card, check) are simple and straightforward, experts estimate that 90% of all assets in the US are non-cash. So if your stash of cash is limited, please consider non-cash donations as a way to support PRH, and still provide you and your family with some important benefits.
Disclosure
Get You Head Out of Your Assets does not provide legal, tax, or financial planning advice. The information and illustrations in this book are for educational purposes only. The type of assets transferred, the actual date of the gift, IRS codes, and other factors may have a material effect on the amount or use of a charitable gift and tax deduction. It is always advisable to seek the advice of independent legal, tax, and/or financial counsel who specialize in charitable giving. An independent counsel gives assistance that is impartial and not given to further the interest of the person giving the advice.
In addition to the intrinsic personal satisfaction that a donor receives from supporting a worthwhile cause, supporting an IRS-qualified 501(c)(3) charity like Poodle Rescue of Houston can offer significant financial and estate planning benefits.
As year-end approaches, please consider donating to Poodle Rescue of Houston.
Our IRS 990 forms and accomplishments reports, available on our website, show that great results are achieved and administrative overhead is extremely low at less than 2% (CPA costs for payroll and the 990 processing).
Your donations go to benefit dogs. No PRH officer or director has ever benefited financially.
In fact, PRH’s directors are among the biggest donors and most dedicated volunteers.
However, as a private charity we receive no government funding, and our expenses – particularly medical expenses – routinely exceed adoption revenues. Simply put, we cannot continue without your help.
Please join us and let’s continue saving dogs.
The tax and financial planning material below is excerpted, with permission, from Patricia A. Guter’s book, Get Your Head Out of Your Assets (2014, PG Publishing). Ms. Guter is an attorney and Certified Financial Planner who specializes in strategies for charitable giving. She can be reached at [email protected].
While donations made with cash or cash equivalents (credit card, gift card, check) are simple and straightforward, experts estimate that 90% of all assets in the US are non-cash. So if your stash of cash is limited, please consider non-cash donations as a way to support PRH, and still provide you and your family with some important benefits.
- Charitable gifts made to qualified non-profits like PRH are deductible when you itemize deductions on the IRS Form 1040 Schedule A.
- Cash donations can allow you to take a charitable deduction, up to 50% of your adjusted gross income. You must maintain a record of the contribution, showing the recipient, amount, and date. For all donations (cash or property) exceeding $250, the charity must send you an acknowledgment of the gift, including the amount, and note whether you received any goods or services in return.
- Donations of stocks or bonds allow you to take a charitable deduction (based on full market value) up to 30% of your adjusted gross income. Also, if you owned the securities for more than 1 year and they increased in value, donating stock to PRH and at the same time buying back shares with the cash that would otherwise have been used to make the charitable donation will increase the stock’s basis price to 100% of its current market value, and could save you capital gains taxes when you sell in the future.
- Gifts of real estate or real property provide significant help that can sustain PRH over the long term. An independent appraiser determines the value for the charitable deduction, which can reduce your federal income taxes for the current year (and excess deductions can be carried for up to five additional years). You could avoid incurring a capital gains tax on the transfer of appreciated assets to a charity. Philanthropically-minded people can also donate a Remainder Interest in Real Estate, where the property is granted to PRH after the donor passes away. This could reduce estate taxes and/or probate costs on the donor’s estate.
- Donations of tangible personal property, such as art, jewelry, and other physical items, can be documented using IRS Form 8283. If the item is related to PRH’s purpose, you can take a deduction of the full fair market value up to 30% of your adjusted gross income as long as the property is held for more than one year. An excess deduction can be carried up to five additional years. If the gift is not related to PRH’s purpose, and is held for more than one year, you can deduct the lesser of your cost basis in the property or its fair market value, up to 50% of your adjusted gross income. Excess deductions can be carried up to five additional years.
- Intangible personal property – such as life insurance policies and retirement plan assets – may also allow you to make a donation with a bigger impact relative to cash or other assets. You may receive significant income tax, estate tax and gift tax savings by donating a life insurance policy to PRH.
- If you are 59 ½ years of age, you can withdraw funds from an IRA or 401(k) to make a charitable gift to PRH without triggering an early withdrawal penalty. You may also be able to deduct the amount of the withdrawal and reduce or eliminate federal taxes on it.
- If you are over 70 ½ years of age, you can make a (direct) Qualified IRA Charitable Distribution up to $100,000 to PRH free of federal income tax. The donated funds are not considered donor income, and the donor doesn’t take a charitable deduction for the gift. Consult with your IRA administrator or your legal, tax, or financial advisor for more information on current tax law.
- Heirs who are named as beneficiaries to your retirement plan assets may be liable for estate taxes of 40% or more, as well as income tax ranging up to 39.6% or more. Combined taxes may consume most of the value. A donor might consider giving a portion of retirement plan assets to charity and giving nonretirement plan assets to heirs.
- Bequests of bank and investment accounts, such as CD’s, can be made directly to a charity with a “Pay on Death” or “Transfer on Death” provision. This would eliminate gift, income and estate taxes and probate costs.
- Bequests, either specific in percentage or dollar amount, or residuary (after other specified amounts are distributed to other beneficiaries), can be defined in a will or as a codicil to it. There are no charitable deduction limits for federal gift and estate taxes for charitable gifts made by a will or trust. Wills are subject to probate (and probate costs).
- Charitable gift annuities and charitable trusts benefit donors as well as charities. With a charitable gift annuity, you make an irrevocable gift to a charity, and receive fixed lifetime income payments based on actuarial analysis. Gift proceeds to the charity are not subject to probate costs. Donors receive a fixed amount regardless of market volatility or interest rate changes. Charitable deductions can be taken on the full appreciated value of securities, not just the original cost basis.
- Charitable remainder trusts allow larger gifts to charity, while providing the donor with income (either fixed or variable) and a significant tax deduction for life or a defined time period. At the end of the defined term, the balance goes to the charity. The trust assets are not probated and generally deductible from the estate for tax purposes at death.
- Charitable lead trusts provide payments for a defined term to the charity, after which the balance reverts to the trustor. Lead trusts can provide heirs with larger inheritances later, and can be a good strategy when interest rates are low and the funding assets are expected to grow over time. Lead trusts can reduce or even eliminate income, estate and gift taxes.
Disclosure
Get You Head Out of Your Assets does not provide legal, tax, or financial planning advice. The information and illustrations in this book are for educational purposes only. The type of assets transferred, the actual date of the gift, IRS codes, and other factors may have a material effect on the amount or use of a charitable gift and tax deduction. It is always advisable to seek the advice of independent legal, tax, and/or financial counsel who specialize in charitable giving. An independent counsel gives assistance that is impartial and not given to further the interest of the person giving the advice.