Planning Your Gift Considerations
Depending upon the size and organization structure of each ministry, you may consider making your gifts from these types of assets.
The simplest thing to give is cash. To receive a deduction for the gift, make certain it is postmarked or delivered before the end of the year. Note; The CARES Act of 2020 allows individuals to deduct all cash gifts to qualified charities with out the maximum or cap of a normal tax year.
2. Qualified Charitable Distribution from IRA
If you are age 70 1/2 or over, you can transfer up to $100,000 directly from your IRA to charity this year to complete a special gift. Timing is important. You want to make certain that there is enough time for your account custodian to process your request, allowing your gift to be completed by December 31.
3. Gifts of Appreciated Assets
If you own assets that have appreciated in value (stocks, bonds, real estate) it may be to your advantage to contribute to ministry, especially if you do not plan to maintain the asset in your portfolio.
You can avoid the payment of tax on the capital gain and your income tax charitable deduction will be for full fair market value of the asset. Again, timing is important.
4. Gifts of Life Insurance
You may give ownership of an existing life insurance policy to ministry and receive an income tax charitable deduction for the cash value of the policy. You may also take a charitable deduction for remaining premium payments as you make them. If you purchase a new policy naming a ministry as owner, your income tax charitable deduction will be for your contributions towards the payment of premiums.
5. Gifts of Tangible Personal Property
You can make a gift of a tangible personal property to a charitable organization. If this asset is related to the tax-exempt function of a charity and you have owned the property for more than one year, you may deduct the fair market value of the asset without paying capital gains on the appreciation. If the asset is not put to a related use by the ministry, the deduction will be limited to your cost basis.
6. Gifts from Business
A corporation can deduct contributions up to 25% ( up from 10% in 2020) of the corporations taxable income. The gift can be cash, inventory, equipment or crops. Contributions other than cash may be more convenient to make. If the business authorizes the gift this year, the gift can be completed next year prior to the filling of the business tax return. If you are unemployed by a corporation, check with your employer to see if they match gifts made by their employees to approved or qualifies charities.
7. Gifts with Income to You
It is also possible to make a gift to ministry and receive and income tax charitable deduction even though you retain income fro the property you transfer. Your gift can be designed to meet your income needs and provide maximum tax benefits.
If you own stocks, bonds, real estate, or even your personal residence or a farm, and make an irrevocable agreement that the property will be available to ministry at your death, you can also receive and income tax charitable deduction.