You sacrifice to give, but why sacrifice more of your giving to taxes than needed? Here are five great ways to ensure your generosity isn’t too taxing (in terms of taxes):
1) If you are over 70½ years old, you can maximize an IRA Charitable Rollover.
Now a permanent part of tax regulations, anyone who is 70½ may distribute up to $100,000 from an IRA to a qualified charity, which include Wesleyan churches and any 501(c)(3) ministries. It meets your required minimum distribution and tax benefits accrue even if you do not itemize deductions.
2) You can avoid capital gain tax on and get a win/win on appreciated stock.
Always a great option! If you own appreciated stock for more than a year, a gift may avoid any capital gain and still provided a full fair market tax deduction—a rare “tax” win/win under IRS regulations.
3) A direct transfer of ownership often makes tax sense as a gift.
Many farming families know that a direct transfer of crops offers a great gift to ministry. You relinquish “full dominion and control” (i.e. legal title to the ministry name) and let the ministry sell the donated crops. You avoid income tax and self-employment tax, while having fully deducted all input expenses. Click here to learn more from The Wesleyan Church.
4) You can give paid up life insurance you no longer need.
Insurance needs change over time and some families find that they have acquired life insurance policies they no longer need. A gift of a paid-up life insurance policy will trigger an immediate tax deduction and a future gift to ministry. Other families that still owe premiums donate the policy and the periodic premiums, both of which can be deductible.
5) A real estate transfer can be given with without as much capital gains tax.
A piece of real estate that has appreciated in value or which has a low cost basis because it has been depreciated, like a rental property, can offer a similar “tax” win/win as stocks provide. The ministry receives a deed and sells the property, and you avoid capital gains and receive a full fair market value deduction based upon a qualified independent appraisal.
For help with these ideas and more, contact the office of Generous Living via email@example.com or by going to Wesleyan.org/donate.