During the end of the year, many people make gifts to their parish. Please remember, if you are considering a gift to the parish, make your decision as early in December as possible to ensure your gift is processed by December 31st.
Enjoy Tax Savings
As you consider your charitable gifts between now and the end of the year, remember that gifts made now can generate income tax deductions that could help reduce your income tax bill. The amount you save depends on tax rates and the portion of your gifts you are allowed to deduct. Only gifts made by December 31 can help reduce the amount of taxes you will owe next April.
Deciding What to Give
The donation of cash is, by far, the most common method of giving. All things considered, however, cash donations are in most circumstances not the most tax-efficient way to give.
If you are 70.5 or older, you can make an IRA charitable cash gift (up to $100,000 per year, per individual, $200,000 per couple) which is not reportable as taxable income and also qualify for your required minimum distribution, which can lower your income taxes. Contributing stocks, bonds, or mutual funds that have appreciated over time has become increasingly popular in recent years, and for good reason. Two key advantages are the following:
1. Most publicly traded appreciated securities with unrealized long-term gains (meaning they were purchased over a year ago and have a current value greater than their original cost) may be donated to the parish, and the fair market value may be claimed as an itemized deduction on your federal tax return.
2. Because the securities are donated rather than sold and proceeds given to the parish, capital gains taxes are not owed on the appreciation. The more appreciation the securities have, the greater the tax savings will be.
One additional consideration: If you have long-term appreciated assets with an unknown original value, donating the assets directly to the parish can save the time and trouble of finding out the original basis and paying the applicable capital gains tax.