How To Get The Most Out Of Charitable Deductions
Last year Americans donated an astounding $346.17 billion to charities; a 7.5% increase over 2010, according to the Atlas of Giving. Donating to charity yields more than just personal satisfaction, it also gives you a chance to get some income tax deductions. While writing a check is quick, easy, and accomplishes both goals, consider that there might be more advantageous approaches to giving. The following charitable techniques provide even greater income tax deductions.
v Donate appreciated securities
Added benefits: no capital gains taxes and a potentially bigger write-off.
If you are holding an appreciated investment with poor prospective value or you need to rebalance, try donating a stock, bond, or mutual fund share to charity. Supposing you’ve owned the security for more than a year, you can deduct the full market value, not just the amount you originally invested.
v Donate Distributions From Your IRA
Added benefit: no income taxes on a required distribution.
If you haven’t taken the required minimum distribution from your IRA this year, happen to be 70½ or older, and don’t need the extra cash for living expenses, you can donate up to $100,000 from your IRA to avoid adding the amount to your taxable income.
v Give to a community fund
Added benefit: a credit on your state taxes.
A few states offer tax credits for donations to community foundation endowment funds, which make grants to local projects and programs. For example, Endow Iowa gives a credit of 25% of the donation, and Endow Kentucky allows donors to claim 20% of gifts, up to $10,000. A credit is highly valuable since it directly reduces the tax you owe, versus a deduction, which instead reduces your taxable income.
For all income tax planning, contact Givner & Kaye. (310) 207-8008
We had a conference on Parliament Hill in Jan 2006 on this topic and the ssocudiisn was very useful. The nonpolitically aligned meeting invited all MPs and had guest speakers who are economists, lawyers, tax accountants, financial advisors, plus ordinary people like myself, advocates for valuing unpaid labor.Your analysis that income splitting benefits the single income family is accurate but what few notice is that it actually benefits all households except that rare one where two spouses have identical incomes. For households earning $30,000 and $30,000 income splitting has no benefit. For those earning $40,000 and $20,000 there would be a drop in present tax, and for those earning $50,000 and $10,000 an even bigger drop. For those earning $60,000 and zero there would be the biggest drop, but all of those adjustments are directly related to the current level of penalty for income earning STYLE. We should be paying tax based on income not on who earned it.Pension splitting for seniors was surveyed for popularity among the public and its approval rating was as i recall over 80%, one of the highest approval ratings ever. I suspect that income splitting would have as high an approval rating were it polled and were the public accurately informed about its fairness.We also noted that not all countries that use it force it. If you don’t split income you can declare that you don’t and you are taxed as an individual -so there is that option in the USSome are concerned single mothers would not benefit since they have no one to share’ the income with. However France has solved that by declaring a child to be equivalent to spouse for the sharing declaration so single mothers also have reduced tax.There are some 60s feminists who fear women might stay home with the baby and be dependent on men if we permitted their role there to be valued. However I make the case that what we have happening right now is what forces dependency. Income splitting by contrast would recognize the caregiver role, part-time or full-time as its own contribution to the household and would give new dignity to the caregiver. Income splitting would make the couple interdependent equals, unlike the present system which sees your status solely in terms of how much you earn.Child poverty would be eliminated or vastly reduced if we reduced tax for those who share income and spread it over not only spouses but kids.http//sharingincome.tripod.com