Gift and Tax Planning Ideas

Make Your Gifts More Affordable
Take a moment now to schedule time with your professional advisor so that last minute details do not prevent you from meeting your financial goals for the year. If your tax rate is higher this year than last, all deductions (such as charitable gifts) you claim as an itemizing taxpayer will be worth more. For example, did you know that if you give $1000 and are in the 35% tax bracket, you will pay $350 less in taxes! If you are in a higher tax bracket, your savings are even greater.

Non-cash Gifts
Making gifts in the form of stocks, bonds, certain mutual funds, and other qualifying non-cash property that has risen in value since you have owned it can make good sense from both philanthropic and financial planning standpoints. If you have owned such property for more than one year, you are entitled to an income tax deduction          based on the current value of the property, not just the lower price you paid for it.

Property as a Gift      
Gifts of appreciated property can serve to eliminate tax on up to 30% of your adjusted gross income (AGI). Any unused deductions can be used to lower taxes in up to five additional tax years! When you make gifts of appreciated property, you also bypass capital gains tax that would be due if you sold the property, adding to the tax savings you enjoy from making your gifts in this manner.

Review Retirement Plans
Do you have retirement accounts that require you to take withdrawals this year? If you do not need the withdrawal amounts, you may find it wise to use a portion of the amount withdrawn to fund charitable commitments. Although you report a withdrawal as taxable income, you are allowed an offsetting charitable deduction for your gifts. This can result in no federal income and for estate taxes paid by your beneficiaries in the future on the amounts donated. For these reasons, many have found their retirement accounts can represent a convenient “pocket” from which to make charitable gifts.

For more information, contact your financial advisor or the Omaha Small Business Network, Inc. via e-mail at info@osbnbtc.org

Estate Planning
Some people think of estate planning as simply preparing for the transfer of one’s assets at death. In truth, that is merely the tip of the iceberg. A sound estate plan can help you provide a secure future for your children and grandchildren, in addition to saving taxes and assisting your favorite charities.       

Nonprofit organizations need financial assistance from people like you in order to continue their good deeds. More than 70% of Americans contribute to the nonprofit groups of their choice throughout their lifetimes. Only around 6% continue this support through a gift in their will or estate plan. By making these “planned gifts,” you can continue to help organizations that are making an important difference in your community. When you leave a legacy, you make sure that help continues to be there for those who need it.

Leave a Legacy
A gift is a wonderful way to recognize someone who has made a difference in your life. This kind of memorial gift can be arranged in your will, the same way that you would leave a personal gift from your estate. You just need to make it clear that the gift is given in memory of a particular person or for a specific use. Contact your professional advisor for help. Your advisor can make sure you are getting the maximum tax and legal advantages allowed for your gift. 

Lifetime Gifts   
You generally may transfer up to $11,000 ($22,000 with your spouse) per recipient to any number of individuals annually without incurring a federal gift tax on the transfer. You may make these tax-free gifts to anyone, including family members, other loved ones or charitable organizations. By doing this you also remove those gifts - and any future appreciation in the value - from your taxable estate. With federal gift and estate taxes currently ranging as high as 50 percent, this can be an extremely effective strategy to minimize taxes.

Charitable Trust
Funding a charitable trust is a good way to contribute to your favorite causes while also providing for yourself or your loved ones. A “charitable lead trust” pays annual income to the charity of your choice for a period of years, after which time the trust assets revert to you or your loved ones, whomever you specify in the trust document.

A “charitable remainder trust” pays annual income to you or your loved ones, again as you specify in the trust document, for a period of years. Then, the trust assets go to the charity you designate. Each type of trust may offer tax benefits - consult your tax advisor for details, as the rules and requirements are complex.