The Benefits of Year End Charitable Giving

Year-end Tips from a Montana Attorney

It is that time of year where we reflect on the previous year and start to plan for the year ahead. It is also a great time consider year-end donations to the charity of your choice. Not only does giving to a charitable organization provide you with the satisfaction and good will associated with giving back, charitable gifts to 501(c)(3) organizations are tax deductible. So, in addition to that good feeling associated with giving, you get the good feeling that is associated with saving on taxes. If you need to make some additional tax deductions for 2011, a gift to a charity is a great way to save.

While we typically write a check to make a charitable donation, there are many other ways to give to a charity that provide significant tax benefits. CNNMoney.com recently posted an article on different methods for making charitable donations that can provide additional tax benefits. These include:

Gifts of Appreciated Securities

By donating a stock, bond or mutual fund to a charity, you will avoid having to pay any capital gains taxes on the appreciation in value. Moreover, if you have owned the security for over a year, you can deduct the full market value rather than just the amount you invested.

Give from your IRA

For those of you over the age of 70 1/2, if you have not taken the required minimum distribution from your IRA this year, you can rollover a portion of your IRA to a charity. Currently, you can donate up to $100,000 to a charity, and the portion you donate will not be included in your taxable income. A rollover of your IRA to a charity can also make it easier to claim deductions, among other added tax benefits.

Donate to a Community Foundation or Community Fund

In addition to the federal tax benefits of charitable gifts, giving to a community fund can also provide state tax benefits. The state of Montana, provides a tax credit program for donations to a community foundation. Individuals are allowed a tax credit of up to 40% of the charitable contribution, with a maximum credit of $10,000 or $20,000 if filing jointly. Business entities are allowed of up to a $10,000 a year tax credit, or 20% of the  donation amount.

Charge Donations & Payoff Next Year

Often the holidays can take a toll on our cash situation, however we still want to donate to charities before the end of the year. If this is the case in your particular situation, consider donating via credit card and paying it off next year. The IRS permits you to take the deduction when the donation is made, rather than when it is paid, so you will still receive the tax benefit this year.

If you have questions about charitable giving, contact estate planning attorney, Kelly O’Brien at (406) 752-6373.