Spring 2017 Issue of Horizons

Charitable organizations provide benefits to society and individuals in need of their services. Charitable giving can also generate personal benefits to the donor. With the right guidance, development and planning, charitable giving can serve as a tax-savings tool in your financial plan while supporting the causes that are meaningful to you. Helping to Achieve Your Goals Charitable giving can play a crucial role in achieving your wealth management goals. By giving money to charities, donors are given the opportunity to align their personal values and interests with their financial goals. It can facilitate the transfer of wealth and provide valuable tax benefits for donors and their heirs.

Charitable giving not only creates income tax benefits for individuals, but can also provide substantial estate tax benefits. The individual income tax charitable deduction is subject to adjusted gross income limitations, whereas the estate tax charitable deduction is not subject to such limitations. Determining which charitable structure is right for you will depend on what your charitable goals are, and if they will be manageable in the long term.

There are numerous vehicles that are commonly used that can help you take full advantage of tax deductions.

Public Charity A public charity is a nonprofit organization that receives public support, actively functions to support another charity or is devoted to testing for public safety. Donations to public charities are fully tax deductible to the extent of the law. Excess contributions over and above the tax law limitations are carried

forward and are deductible for up to five years following the year of the gift.

Donor Advised Funds (DAFs) DAFs allow donors to make charitable contributions at a specific date in time, receive an immediate tax benefit and then give recommendations as to which nonprofits will receive distributions.

Donors may take a tax deduction in the year of their contribution and have the ability to give funds to various charities over a number of years. This allows donors to get an upfront tax deduction for the fair market value of the cash or securities gifted and avoid paying federal and state income taxes upon the sale of the securities.

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