Combining Philanthropy and Tax Savings

A very important item on your tax preparation checklist is the deduction for charitable contributions. While it is certainly easy to write a check or donate online, there are other ways to be charitable and potentially save significant additional income taxes. For donations under $1,000, stay with the easy methods shown above.

For larger donations, the following techniques can provide significant tax savings as well as fulfill your charitable desires:
-Transfer highly appreciated securities directly to charity
– Transfer highly appreciated personal property, e.g. works of art or other collectibles directly to charity.

You can also set up one or more of the following:
– Charitable gift annuity
– Charitable remainder trust
– Charitable lead trust
– Private foundation
– Donor advised fund with Community Foundation

Transferring highly appreciated assets to charity either directly or through one of the aforementioned vehicles can allow you to avoid or defer capital gain taxes on the appreciation. In addition, some of these techniques can allow you to create an income stream at a higher yield than might currently be available.

Due to the complexity of these techniques, consulting with a high level professional tax preparation services firm, which is well versed in these matters, is highly recommended.

Eugene H. Fleishman, CPA, Principal