Scrambling to make your charity gifts by year’s end, in case lawmakers cap the charitable tax deduction in 2013? Though next year’s tax code is still uncertain, if you realized significant income (including capital gain) in 2012, an offsetting charitable contribution can mitigate some of your tax burden. A gift to a donor-advised fund at TPF now can give you the highest deduction allowed by law for 2012 while allowing you to push decisions about charitable gifts to specific causes into the future.
For example, a couple earning $200,000 gives $20,000 in cash to a charitable fund this year. They take a 2012 deduction for $20,000, and the money goes into a donor-advised fund in their name at TPF. After money goes into such a fund, it is invested and can grow tax-free until the couple designates eligible groups to receive it – both in the US and in Turkey, at which point there isn’t any deduction. There isn’t a required annual payout, so the couple might give nothing in 2013 and then a large donation in 2014, to support girl’s education or arts and culture in Anatolia. TPF handles all administrative paperwork.
Under current law, donations of assets that have risen in value, such as shares of stock, often qualify for a deduction at the full market price, enabling donors to skip paying capital-gains tax on the appreciation. In other words, if the couple gives $20,000 of stock shares bought for $4,000 years ago instead of the same amount of cash, they still get a $20,000 deduction, but they bypass $2,400 of capital gains tax. With the stock market having recovered much of its losses from 2007-09 and the possibility of deduction limits next year, many advisers say now is a good time to give stock.
If deductions for 2012 are important to you, please call TPF at 646.530.8988 to discuss your year-end donations.
Turkish Philanthropy Funds does not provide tax, legal or accounting advice. The views and strategies described may not be suitable for all investors.This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.