2008 Year-End Giving Ideas


A brief guide to the benefits

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As you consider your year-end tax planning, we hope you will consider making good use of the income tax charitable deduction. Your 2008 year end gift can significantly reduce your income taxes, while providing meaningful support for us.

No matter what your income, if you itemize, you can almost always lower your income taxes through charitable giving. The amount of the income tax savings will depend on your tax bracket.

Example: If you are in a 33% income tax bracket in 2008, and you itemize your deductions, a $1,000 gift to us by December 31 will save you $330 in 2008 taxes.

Consider making more charitable gifts in those years when you have the most income — and are in the top federal income tax brackets. If such is the case for 2008, you may wish to consider accelerating future charitable gifts into this year. Check with your tax adviser.

Giving is, of course, much more than tax brackets and charitable deductions. Your charitable gifts make an important difference in what we are able to accomplish.

Here are some of the best 2008 year-end gift ideas. We would be pleased to provide you with further information. Also, we urge you to discuss your tax planning with your accountant or other professional adviser.


Gifts of Cash
If you itemize, you can lower your 2008 income taxes simply by writing us a check by December 31. There is no easier way to garner a 2008 year-end charitable deduction! Make sure your envelope is postmarked by December 31; if it is, your gift will qualify as a 2008 gift even if it is not received by us until the first week of 2009.

Some employers will match charitable gifts, meaning your gifts are worth even more. If your company or firm has a matching gift program, simply enclose the form along with your check.

Gifts of cash are fully deductible — up to a maximum of 50% of your adjusted gross income. For example, if your adjusted gross income for 2008 is $50,000, up to $25,000 of charitable gifts may be deducted in 2008. Any excess can generally be carried forward and deducted over as many as five subsequent years.


Gifts of Stock
If you own stock, it is almost always more tax-wise to contribute stock than cash.

This is because a gift of appreciated stock generally offers a two-fold tax saving. First, you avoid paying any capital gains tax on the increase in value of the stock. Second, you receive an income tax charitable deduction for the full fair market value of the stock at the time of the gift.

Example: If you purchased some stock many years ago for only $1,000, and it is now worth $10,000, an outright gift of the stock to us would result in a charitable contribution deduction of $10,000. In addition, there is no capital gains tax on the $9,000 of appreciation.

Make sure you have owned the stock for a “longterm” period of time (this generally means that you have held the stock for more than one year) to qualify for these significant tax advantages. Your gift of stock should be postmarked by December 31. In the alternative, a stock broker or trust officer can arrange for a year-end gift of stock from your account.

Gifts of appreciated stock are fully deductible —up to a maximum of 30% of your adjusted gross income. For example, if your adjusted gross income for 2008 is $100,000, up to $30,000 of long-term appreciated stock and other property gifts may generally be deducted in 2008. Any excess can generally be carried forward and deducted over as many as five subsequent years.

Download the Gift of Stock Donation Form


Gifts of Real Estate
A residence, vacation home, farm, acreage, or vacant lot may have so appreciated in value through the years that its sale would mean a size-able capital gains tax. By making a year-end gift of this property instead, you would avoid the capital gains tax, and, at the same time, receive a charitable deduction for the full fair market value of the property.

It is also possible to make a gift of your home, farm, or vacation home so that you and your spouse can continue to use it for your lifetimes — while you receive a tax deduction in 2008. Please give us a call for details.


Life Income Gifts
If you are considering a major gift, a “life income” gift may be an excellent year-end gift. Such a gift can increase your own income!

You could transfer cash or stock to us and establish a “charitable remainder unitrust” or “charitable remainder annuity trust” that would provide you with a 5% or greater annual return. This income would be paid to you and/or a loved one for life, after which the assets would be distributed to us. Through such an arrangement, you would be increasing your income and making a meaningful (and tax-deductible) contribution to us at the same time.

Example: Suppose Mrs. Barnes, age 75, purchased some stock many years ago for $10,000 and that the stock is now worth $100,000. But, she receives only $2,000 per year in dividends, or a 2% yield. By transferring the stock to a charitable remainder trust and specifying that she wanted a 6% return for life, she could:
  • Triple her annual income (from $2,000 to $6,000);
  • Avoid the capital gains taxes that would otherwise be incurred on a sale of the stock; and
  • Be entitled to a charitable contribution deduction of approximately $55,000.
    (The amount of the deduction depends upon the age of the donor, the rate of return specified in the trust,the size of the gift, and other factors.)

Bequests
While you’re considering your 2008 income tax savings, this may also be a good time to consider long-term tax savings. The federal estate tax can still take approximately 40% to 50% of one’s estate at the time of death. That’s a higher tax bite than the income tax! It definitely pays to do some advance planning with your attorney and other professional advisers. 

We hope you will consider a charitable bequest in your will — to benefit us while you save estate tax dollars at the same time.


For Further Information
We would be pleased to provide you, your attorney, your accountant or your tax adviser with additional information and assistance. Keep in mind that the information in this brochure is necessarily general in nature. You should contact your own professional tax adviser to learn how this general information relates to your individual circumstances. Thank you for your interest and support.


Copyright 2008 by Calder P. Sinclair

For information or to make a donation, please, contact: Maureen Robertson 949-494-8383 x741 or mrobertson@newlife.com