Idea 1 – IRA Charitable Rollover
The compromise tax bill (“Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010”) extends until December 31, 2011, a provision known as the “Charitable IRA Rollover” which allows taxpayers age 70½ or older to make tax-free transfers (of up to $100,000 per year) directly from their IRA to charities.
You can make distributions directly to Suicide Prevention Education Alliance (SPEA) from your traditional or Roth IRA, as long as you are at least 70 ½ years old when you transfer the gifts. Such gifts can be made without increasing your taxable income or withholding. Additionally, funds transferred from your IRA to SPEA will NOT subject your Social Security income to higher tax levels, in most cases will not increase your taxable income for state purposes, and will count toward your minimum required distribution (MRD).
Idea 2 - Gifts of Stock
You may want to consider making a gift of appreciated stock or mutual fund shares rather than a cash donation. A gift of appreciated property often provides increased tax benefits, along with the satisfaction of contributing to our lifesaving work.
Tax Benefits
Charitable contributions of appreciated securities provide two potential income-tax advantages. The first is a charitable deduction — generally for the fair market value of the securities at the time of the contribution, subject to certain tax law limits. The second benefit is that you are not taxed on the capital gain that would result if you sold the property.
To gain these benefits, the stock must be long-term capital gain property – stock you’ve owned for more than one year or stock you have inherited. If the stock would generate a short-term capital gain if sold, your charitable deduction is limited to your cost basis rather than the stock’s fair market value.
Other Considerations
While donating appreciated stock can give you tax advantages, you might want to think twice about giving stock that has lost value since you bought it. A better plan may be to sell stock that has lost value (thus creating a capital loss for your tax return) and donate the proceeds of the sale to SPEA.
The information above is not intended to be legal, tax, or investment advice. Please consult your attorney and/or personal financial advisor. We have trustees who are knowledgeable about these tax reduction strategies and would be happy to work with you and your tax advisor. If interested in learning more, please contact executive director Pat Lyden at 216.464.3471.