We all know giving to church or charity can save income taxes if Schedule A itemized deductions are claimed on the individual income tax return.
Of course the church or charity benefits from the contribution. It gives them the ability to fulfill their mission and goals.
Some folks seem to think only contributions by check can be done. In fact, many seniors have found doing a charitable gift annuity benefits the giver as well as the church or charity.
The gift of a check, or appreciated common stock, or other assets (subject to certain rules) given in exchange for payments to the giver (or giver and one other person) benefit the church or charity as well.
For example, if a person age 73 gave stock that went up in value, there is no capital gains tax to pay. The annual payments will be about 6.1 percent of the value, but the taxable amount will be reduced for the tax basis (only partly taxable income).
Also, the giver will get a charitable contribution deduction (for Schedule A of Form 1040) of about 35 percent of the total value of the stock.
If the charitable contributions deduction is more than can be claimed in the year of the gift, the excess deduction carries over to the next five years.
Sometimes an adult child will establish a charitable gift annuity for a parent. It gives the parent income for life that is only partly taxable. The child gets a charitable deduction to save taxes. The parent may get more income than could be earned in money market or certificates of deposit. And, the parent may be in a lower income tax bracket than the child, giving overall tax savings to the family.
The big benefit is for the church or charity. They get a donation of significance.
The increased income to the person receiving the payments and the other tax savings possible will be a benefit to the recipient.
Why not talk with your CPA about how a charitable gift annuity might help meet some of your goals and desires?
Did you hear "Dolphins are so smart that within a few weeks of captivity, they can train people to stand on the edge of the pool and throw them fish"?
• John Bullis is a certified public accountant, personal financial specialist and certified senior advisor serving Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs, LLC.