Year End Giving
Tis the season
If you’re like many people, you do your major giving toward the end of the year. I think part of the reason is we get caught up in the spirit of the season. The shopping, planning and gift giving is all part of the fun. It feels good. Making a donation to your favorite non-profit organization feels good too.
Give yourself a break
Another reason is because it is the end of the tax year and you should have a pretty good idea how things went for you financially for the past 12 months. Now it's time to give yourself something- a tax break on your 2011 taxes!
It's not too early to start planning. By the time you fill out your income tax return, it will be too late to make charitable gifts for the previous year. Take the time now to do some planning while you still have the opportunity to make a year-end gift.
Calculate your income
Try to get a handle on your tax liability for the year. Did your earned income and/or unearned income increase? Did you sell any appreciated assets? Will you owe more taxes? This alone could motivate you to increase your giving before December 31.
Generally speaking, the tax code limits your charitable deduction each year to a percentage of your adjusted gross income, depending on the type of gift. For a gift of cash, you can deduct an amount up to 50 percent of your adjusted gross income. For a gift of securities or real estate held more than one year, you can deduct the valuation up to 30 percent of your adjusted gross income.
For each of these gifts, you are allowed a five-year carryover of any “excess” deduction for use in subsequent years.
Review your stock portfolio
Look at the stocks you have held for more than a year and identify those that have appreciated in value. Which ones have appreciated the most? It may be prudent for you to make your year-end gift using one or more of these stocks.
If you sold the stock, you would incur capital gains tax on the appreciation. However, if you donate the stock and allow the AAVSO to sell it, capital gains taxes are avoided. You receive a charitable deduction for the full fair market value* of the stock (subject to the same limits as above), just as you would if your gift was made with cash. As with a cash donation, if you can’t use all of the charitable deduction resulting from the gift this year, you can carry it forward for up to five years.
*[The fair market value for securities is the mean between high and low on the date of delivery. For mutual fund shares, their fair market values are their redemption prices.]
I don't know anyne who did all that well in the stock market this year. Maybe none of your stocks appreciated in value. You're not alone. But hey, the flip side of giving from securities can make sense too. If you own securities worth less now than when you purchased them, you can sell them and donate the cash proceeds. Then, you can take a capital loss on your tax return, which you can’t do if you donate those securities directly to The AAVSO.
Qualified Charitable Deduction
If you are 70 and a half or older, the federal government will permit you to rollover up to $100,000 from your IRA to a qualified charitable organization without increasing your taxable income or paying any additional tax. These tax-free rollover gifts can be $1,000, $10,000 or any amount up to $100,000 this year. And you can use your gift to meet your minimum distribution requirements.
Talk to your financial advisor
As with any important financial decision, you should check with your financial advisor before selling stock or making a large gift. But when you are ready, you can contact the Development Officer for information or instructions at firstname.lastname@example.org.
December 31st is the deadline
If you're like most of us, you'd rather make a donation to the AAVSO than a payment to the IRS. Well, break out the check book. Time is running out.
Happy Holidays and thank you for your continued support.
Last Updated: December 5, 2011 - 12:46pm