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How to Plan Your Year-End, Tax-wise Giving

Five Key Strategies to Consider

Hard to believe: this year will be gone before you know it! Many churches are in the midst of their annual stewardship campaign or seeking support for a capital campaign. As I meet with church leadership, I often hear comments and questions about how we can help our church friends to maximize their giving as wise stewards.

Take a moment to review your financial giving goals. The following information may assist you in tax planning and may help accomplish your giving goals for the year.

OUTRIGHT GIFTS OF APPRECIATED ASSETS

Gifts of appreciated assets – like stocks, bonds or mutual funds that have gained in value – provide an excellent tax-wise way to make gifts to your local church or United Methodist charity.  Such securities can be donated directly or used in planned gifts (like charitable trusts or charitable gift annuities).  Donating appreciated assets usually allows the donor to avoid or defer the capital gains tax.  These taxes would be owed if such assets were sold while still providing the maximum tax deduction allowed by law.  In terms of tax benefits, it is often better to give appreciated assets rather than cash.

The Foundation can assist you with transfers of stock or mutual funds as a service, free of charge (except for the actual brokerage commission for selling the securities), as long as the gift benefits a church, agency or mission of the United Methodist Church.  Transfers may be made directly from your bank or brokerage account to the Foundation’s account. These gifts can provide you with numerous benefits:

  • Receive an income tax deduction, based typically on the asset’s fair market value
  • Avoid federal and state capital gains taxes
  • Avoid the Affordable Care Act Medicare tax

OUTRIGHT GIFT FROM AN IRA

If you are age 70½ or older and required to make a distribution from your IRA or tax deferred account, you may be interested in a way to reduce the tax liability and make a charitable gift at the same time from your IRA withdrawals. An IRA charitable rollover is an excellent way you can help continue our work or to support your local UM Church and benefit this year.  Transfers must be made directly to a charity from your account – and not be withdrawn to you personally.  These gift may provide you with numerous benefits:

  • Avoid taxes on transfers of up to $100,000 from your IRA to the Foundation, local church or other charity
  • Satisfy your required minimum distribution (RMD) for the year
  • Reduce your taxable income, even if you do not itemize deductions
  • Make a gift that is not subject to the 50% deduction limits on charitable gifts
  • Help further the work and mission of your favorite ministry

How an IRA charitable rollover gift works:

  • Contact your IRA plan administrator to make a gift from your IRA to the Foundation, local church or other charity.
  • Your IRA funds will be directly transferred to the charity of your choice. Please contact us if you wish for your gift to support a specific church, endowment, or ministry. 

Please note that IRA charitable rollover gifts do not qualify for a charitable deduction

LIFE INSURANCE GIFTS

Making a gift to your church of any unneeded or obsolete life insurance policy can provide you with the following benefits:

  • Receive a charitable income tax deduction
  • Reduce your taxable estate
  • Preserve your cash and savings

CHARITABLE LIFE INCOME PLANS

If you own low-yielding assets and are seeking a higher income, a charitable life income gift such as a charitable gift annuity or a charitable remainder trust may be worth exploring. In exchange for your charitable gift of cash or appreciated securities, you reap multiple benefits:

  • Receive income for one or two lifetimes
  • Generate a current income tax deduction
  • Bypass all or a portion of the capital gains on appreciated assets
  • Enjoy increased financial security

CHARITABLE LIFE ESTATES

If your estate plans include leaving your residence (home, farm, vacation home) to the church, you may wish to create a charitable life estate arrangement. You can make a gift of your property through the Foundation to benefit your church or other charitable causes today and receive the following benefits:

  • Current income tax deduction
  • Life use and enjoyment of the property
  • A lasting legacy to further church ministry

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 to your church through your will or trust or retirement plan. Such generosity can save your heirs taxes as well.

COUNSEL TO MEET CHARITABLE GIVING GOALS

To learn more and talk with one of our staff about your personal planning options, contact us.  We will be glad to listen and help you explore your options to meet your goals.

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