…your source for the creative side of Topeka: Charitable Donations

Charitable Donations

DON’T FORGET THE TOPEKA ART GUILD WHEN MAKING CHARITABLE DONATIONS

The Topeka Art Guild is an organization described in Section 501(c)(3) of the Internal Revenue Code, which means that contributions to TAG are generally tax-deductible. In addition to regular gifts of cash, don’t forget that under current law and until December 31, 2009 individuals over age 70 ½ can generally make contributions of IRA amounts to TAG under the “Charitable Rollover” rules. This is an excellent opportunity to donate amounts that would otherwise be includible in ordinary income to you or your heirs at a future date thus allowing you to leverage your gift to TAG under current law by avoiding the payment of income taxes on these amounts.

In addition to lifetime gifting, don’t forget TAG in making charitable gifts as part of your estate plan. For some individuals, gifts to charities such as TAG can help to reduce or eliminate federal and state estate taxes under current law. Additionally, gifting a portion of your IRA or other qualified retirement plan accounts to charity can help maximize the amount those who are charitably inclined can gift to their children or other heirs at death. By gifting a pre-tax IRA or other qualified retirement account to charity instead of using after-tax dollars for the same purpose, the income tax burden associated with this type of asset is no longer borne by children or other heirs, leaving other after-tax dollars for these individuals to inherit generally income tax free. For example, someone with a sizeable IRA account who is inclined to make a gift of $10,000 to a charity, with the remainder of their estate going to children could designate a $10,000 portion of their IRA to go to charity where if a child inherited $10,000 of the IRA, the after-tax amount to a child could be roughly $6,000-$8,000 dollars, depending upon their particular situation. In other words, for individuals who are already planning on making a specific gift to charity (and using the example above) gifting a portion of the IRA account instead of making a specific bequest of cash to the charity results in a savings of anywhere from roughly $2,000 to $4,000 dollars for that individual’s heirs.

Even individuals who are not charitably inclined can make a gift of a pre-tax IRA or other qualified retirement plan account at death and leverage the amount given to charity when viewed on an after-tax basis.

As with any tax planning, please contact your tax advisor in order to make sure that you can take full advantage of the planning tips laid out above. Everyone’s situation is somewhat different, but a quick call to your accountant or other tax advisor should help you determine whether a gift to charity this year is advisable.

Again, please do not forget the Topeka Art Guild when deciding whether or not to make charitable contributions this year. Your support is greatly appreciated!