Tag: charitable giving

  • Wise Charitable Giving

    Charities depend on gifts from people like us to do their good works. That’s why they are not shy about asking us for money. Here are some ideas about maximizing your charitable gifts.

     Do your homework. The good works that charities do often overlap, and some charities operate more efficiently than others. Websites like charitynavigator.org and charitywatch.org can help you rate and compare established charities to find out how much of your gift will go to actual charitable work versus the charity’s  administrative and fundraising overhead. Of course, it costs money to run a charity, and it also costs money to raise money. However, if these expenses exceed
    25 percent of a charity’s revenue, you should consider alternatives.

     Don’t sell an appreciated asset to make a cash gift. If you own Apple stock that you bought for $10 per share, don’t sell it now at $175 per share to raise the cash to make a charitable gift. You will get an income tax deduction for your gift, but you will also be liable for capital gains tax on the difference between the $175 sale price of the stock and the $10 that you spent to buy it. You will have less after-tax cash to give the charity, and your deduction will be limited to the amount of your cash gift Instead, give the stock to the charity. This way, you will make a bigger gift and get a bigger deduction.Your deduction will be the full fair market value of the gifted stock. {Play}

     Consider making gifts from your retirement plans. If you give retirement plan assets to your loved ones after you die, they will have to pay income tax on those gifts. So name charities as beneficiaries of your retirement plans and give your non-taxable assets to individuals. If you have reached the age when you must take required minimum distributions (RMDs) from your retirement plan, you can direct up to $100,000 of your annual RMD to go to charity. You will not get a deduction, but you will not have to pay income tax on the gifted portion of your RMD. This works out better for you than a deduction.

    SCOTT MAKUAKANE, Counselor at Law
    Focusing exclusively on estate planning and trust law.
    est8planning.com
    808-587-8227 | maku@est8planning.com

    Charities depend on gifts from people like us to do their good works. That’s why they are not shy about asking us for money. Here are some ideas about maximizing your charitable gifts.

  • Now’s the Time: Charities Need Our Help

    In these challenging economic times, many worthwhile charitable organizations find themselves in a precarious financial position. Meanwhile, they are experiencing unprecedented demand, especially those charities that provide basic needs like food and shelter.

    Thankfully, new, unique provisions in the tax code have been implemented in response to the COVID-19 crisis, creating more incentives for giving. You may be able to better leverage your donations with tax-smart strategies. So, if you’re able to extend your generosity during this time of increased need, it may be an opportune year to make charitable contributions.

    Everyone Can Claim a Deduction

    In 2020, the standard deduction is $12,400 for a single tax filer or $24,800 for a married couple filing a joint return (even more for those age 65 or over). Your itemized deductions would need to exceed those levels to benefit from itemizing. Those who don’t typically itemize are not able to deduct charitable contributions from their taxes. However, on your 2020 tax return, you will be allowed to deduct up to $300 in cash contributions to qualified charities even if you choose the standard deduction.

    A Higher Ceiling on Tax-Advantaged Giving

    If you itemize deductions and plan on large gifts, the tax rules prevented you from claiming a deduction that exceeded 60 percent of your adjusted gross income (AGI) in a single year. In a unique provision for 2020, you can now claim a deduction valued at up to 100 percent of your AGI for charitable  contributions. If your financial circumstances put you in a position to make substantial gifts, this will be the most favorable year, from a tax perspective, to do it.

    A Tax-Efficient Distribution Strategy From Your IRA

    A special provision for 2020 allows individuals subject to Required Minimum Distributions from IRAs and workplace retirement plans to forego those distributions. If you don’t need to draw from your IRA to meet your income needs for this year, you still have an opportunity to put the funds that would have been RMD dollars to use as a charitable contribution. The most tax-efficient way to do so is with a Qualified Charitable Distribution (QCD). Up to $100,000 per year can be contributed to charitable organizations in this way. With a QCD, if you are 70.5 or older, funds are distributed directly to the charity from your IRA so you don’t have to claim the income before making the contribution. That is a tax-saving strategy you can use whether you itemize deductions or claim the standard deduction.

    Put a Giving Strategy in Place

    Your circumstances today and your financial future may require careful reassessment given the current economic challenges. Incorporate your charitable giving strategy into your comprehensive financial plan review. Check with your financial advisor and tax professional as you consider your options for giving in 2020 and beyond.

    MICHAEL W. K. YEE, CFP,® CFS,® CLTC, CRPC®
    1585 Kapiolani Blvd., Ste. 1100, Honolulu, HI 96814
    808-952-1222, ext. 1240 | michael.w.yee@ampf.com
    Michael W. K. Yee, CFP,® CFS,® CLTC, CRPC,® is a Private Wealth Advisor, Certified Financial Planner™ practitioner with Ameriprise Financial Services Inc. in Honolulu, Hawai‘i. He specializes in fee-based financial planning and asset management strategies, and has been in practice for 36 years. Investment advisory products and services are made available through Ameriprise Financial Services LLC., a registered investment adviser. Ameriprise Financial Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. Ameriprise Financial Services LLC. Member FINRA and SIPC. ©2020 Ameriprise Financial Inc. All rights reserved.

    In these challenging economic times, many worthwhile charitable organizations find themselves in a precarious financial position. Meanwhile, they are experiencing unprecedented demand, especially those charities that provide basic needs like food and shelter. Thankfully, new, unique provisions in the tax code have been implemented in response to the COVID-19 crisis, creating more incentives for giving.

  • Smart Charitable Giving

    The people of Hawai‘i are generous with public charities. On the other hand, most of us do not have money to burn. Here are some good ideas about choosing where and how to give.

    ♦ DO YOUR HOMEWORK. The good works that charities do often overlap and some charities are more effective than others. Websites like charitynavigator.org and charitywatch.org can help you compare established charities to find out, for example, how much of your gift will go to charitable work versus administrative and fundraising overhead. While it costs money to run a charity and it also costs money to raise money, if expenses exceed 25 percent of a charity’s revenue, you should ask why. If the charity cannot give you a good answer, you should consider giving elsewhere.

    ♦ DON’T SELL AN APPRECIATED ASSET TO MAKE A CASH GIFT. If you own Apple stock that you bought in 2000 for $2 per share, don’t sell it now at $200 per share to raise the cash to make a charitable gift. Although you will get a deduction for your cash gift, you will also be liable for capital gains tax on the difference between the $200 sale price of the stock and the $2 purchase price. You will have less after-tax cash to give the charity and your deduction will be limited to the amount of your gift. Instead, make a bigger gift and get a bigger deduction by giving the stock to the charity. The charity can then sell the stock without having to pay capital gains tax, and you will get a deduction for the full fair market value of the stock at the time of the gift.

    ♦ MAKE GIFTS FROM YOUR IRAS. If you make your loved ones the beneficiaries of your traditional IRAs after you die, they may have to pay income tax on most of what they receive. However, if you make charities your beneficiaries, there will be no income tax. So to the extent you can, name charities as beneficiaries of your retirement plans and use your non-taxable assets for making gifts to loved ones.
    If you have begun taking required minimum distributions (RMDs) from your traditional IRA, you can give up to $100,000 of your annual RMD to charity. These gifts are not deductible, but you will end up paying less tax because the gifted portion of your RMD is not taxable.

    As always, talk with your trusted advisors to find out how to make charitable giving a win-win for you and the charities you support.

    SCOTT MAKUAKANE, Counselor at Law
    Focusing exclusively on estate planning and trust law.
    www.est8planning.com
    808-587-8227 | maku@est8planning.com

    The people of Hawai‘i are generous with public charities. On the other hand, most of us do not have money to burn. Here are some good ideas about choosing where and how to give…