|
|||||||||||||||||||||||||||
|
Charitable Giving for Zero Cash Supporting Etz Chaim doesn’t have to involve parting with your hard-earned cash. In fact, charitable giving can actually increase your cashflow by saving you taxes – if it’s done right. As we get closer to the end of the calendar year; many of us are looking for ways to save on income taxes. One of the ways that Uncle Sam provides for reducing taxes is by allowing a charitable deduction for gifts to organizations such as Congregation Etz Chaim. The problem is, in order to save $1,000 in taxes, you’d have to give away almost $3,000 (if you’re in the 35% bracket), leaving you with a negative cashflow of almost $2,000. But what if you could get the $1,000 tax savings and not have to spend one cent? And, what if I told you that not only could you get the $1,000 tax savings, but save another $300 in capital gains tax or a total of $1,300 – again, without laying out one red cent? Do I have your attention? Well I should, and it’s for real, and it’s not difficult to do at all! Here’s how it works. Let’s say you bought stock in 1997 that cost you $10/share, which is now selling for $30/share. And let’s say you want to donate a hundred shares to Etz Chaim before December 31st. Even though you paid only $1,000 for those 100 shares, you will still get a $3,000 tax deduction (the current value), avoid any capital gains and have no cash outlay in making the donation. When the stock is transferred to the Congregation, we immediately sell it; and because we’re exempt from tax, we pay no income tax on either the gain nor on the donation. If you sold the shares yourself first and then donated the cash, you’d still get the $3,000 tax deduction, but you’d also be hit for a capital gains tax of $300 (15% of the gain), and would also pay a commission to your broker on the sale. Donating the stock directly to Etz Chaim avoids cash outlay, avoids capital gains tax, avoids broker commissions, and even avoids alternate minimum tax considerations. This is better than a win-win deal, it’s a win-win-win-win deal! This works not only for stocks, but for other securities as well. However, it is particularly advantageous on stocks that have appreciated in value, and even more advantageous if the stocks pay a small dividend, since there’s less of a loss of future income to you. Even with the ups and downs of the market, over the past 10 years alone, the value of marketable securities have almost tripled, so that a stock going from $10/share in 1997 to $30/share today is not unusual, on average. Donating appreciated stock can be used not only for making a Chai contribution, annual appeal or other gift to CEC, but can also be used for paying your dues. In fact, if you pay next year’s dues now (in 2007), you will avoid any increase for 2008/2009 – another $50 to $100 savings. One additional idea, with or without stock gifts, if you’re over 70 ½, and have a traditional IRA or SEP from which you are required to take distributions, all or a part of the distribution can be paid directly to the Congregation. Although you don’t get a charitable deduction, you do reduce your taxable income. This can be particularly useful if you don’t itemize deductions. On the other hand, if you do itemize, there could be additional tax savings because it increases your medical deductions by reducing the adjusted gross income threashhold. You should, of course, always consult with your own tax advisor before availing yourself of any of these ideas, so that you understand how it will affect you personally. A published article should never be considered individual tax advice.
|
||||||||||||||||||||||||||
| Congregation
Etz Chaim 1881 NE 26 Street, Suite 100 Wilton Manors, FL 33305 954-564-9232
|
|||||||||||||||||||||||||||
