Americans gave $316.23 billion to charity in 2012. The majority of that giving, $223 billion, came from individuals, that is 88% of households – that is you.
As the end of the calendar year approaches, many of us find ourselves scrambling to select a charity that will use our money wisely and effectively while giving us an excellent way to reduce our tax burden for the year, particularly if we are giving in Turkey. TPF is here to help.
Start by identifying a cause to support. TPF works with more than 40 organizations in Turkey. TPF’s website helps you identify a cause or a project that is most meaningful to you. You just select your project and let TPF do the rest – following up with the grantee, reporting back to you on the use of your funds – letting you enjoy the benefits of giving to Turkey from the United States.
Then think of ways to save on taxes. Gifts of stock are a great way. Normally when you sell long-term appreciated securities, you are liable for tax on the capital gains. But not when you give shares to charity. If you have stock you’ve held for more than a year, you can get a charitable deduction and eliminate your capital gains liability. This can also be a good strategy for offsetting other capital gains taxes you’ve incurred.
If you have stock that is depreciated, you can sell the stock first, donate the cash proceeds, and take deductions for both the capital loss and the charitable donation.
Donor-advised funds are another solution. These funds allow you to make a charitable contribution now, claim the tax deduction on your 2013 tax return, but make donations later. If you are very busy but want to give yet aren’t sure what charities to support, this option is for you.
That’s because donor-advised funds are a tax-efficient way to donate taxable stock, mutual funds or other assets that have gained in value. You can claim a deduction for the entire market value of the securities. You avoid capital gains taxes, which leaves more money available for your giving. At TPF, we also accept donations of illiquid assets, such as nonpublicly traded securities and real estate.
Donor-advised funds is also a great way to reduce taxes on a year-end bonus or business sale. You can establish a DAF with a portion of the money before Dec. 31 thus securing the deduction for 2013 and decide later how you want to distribute the money.
Most importantly, you don’t need to be Bill Gates or Mark Zuckerberg to contribute to a donor-advised fund. The minimum required to open an account at TPF is $5,000.
Qualified IRA distributions offer great tax savings as well. If you are 70 or older and have an IRA (Individual Retirement Account), you are required by law to take a required minimum distribution (RMD) annually by Dec. 31 or face penalties. The distribution creates income tax liability.
In 2013, you can give up to $100,000 or $200,000 as a couple from your IRA to qualified charities. By transferring your required minimum distribution or more to charity, you could get better tax savings than with a charitable deduction.
Perhaps best of all, if you have children, is to build a giving legacy to involve future generations in the giving process. There are many ways that we can help you build a giving legacy by allowing you to give on your own timetable while enjoying the immediate tax benefits of charitable giving. This way you can get your family involved and together you can decide what causes and organizations to support and how much to give — exploring your values along the way.
Call us (646.530.8988) or email us ([email protected]) if you’d like to discuss your year-end giving plans in detail.
Turkish Philanthropy Funds does not provide tax, legal or accounting advice. Content provided here is informational only. We recommend that you contact your accountant, attorney, or financial advisor for more detailed information appropriate to your individual financial situation.