You might want to consider three charitable giving strategies that can help boost your
2014 charitable contribution deduction.
- Use your credit card.
Donations charged to a credit card are deductible in the year charged, not
when payment is made on the card. Thus, charging donations to your credit
card before year end enables you to increase your 2014 charitable donation
deduction even if you're temporarily short on cash or just want to put off
payment until later.
- Donate a life insurance policy.
A number of charities are asking their donors to consider donating life
insurance policies rather than (or in addition to) cash in order to make
substantially larger gifts than would otherwise be possible. The advantage to
donors is that they can make a sizable gift with relatively little up-front
cash (or even no cash, if an existing policy is donated). The fact that a
charity may have to wait many years before receiving a payoff from the gift
is typically not a problem because charities normally earmark such gifts for
their endowment or long-term building funds.
If handled correctly, a life insurance policy donation can net the donor a
charitable deduction for the value of the policy. A charitable deduction is
also available for any cash contributed in future years to continue paying
the premiums on a policy that was not fully paid up at the time it was
donated. However, if handled incorrectly, no deduction is allowed. For this
reason, we encourage you to contact us if you are considering the donation of
a life insurance policy. We can help ensure that you receive the expected
income or transfer tax deduction and that the contribution works as planned.
- Take advantage of a donor-advised fund.
Another charitable giving approach you might want to consider is the
donor-advised fund. These funds essentially allow you to obtain an immediate
tax deduction for setting aside funds that will be used for future charitable
With donor-advised funds, which are available through a number of major mutual
fund companies, as well as universities and community foundations, you
contribute money or securities to an account established in your name. You
then choose among investment options and, on your own timetable, recommend
grants to charities of your choice.
The minimum for establishing a donor-advised fund is often $10,000 or more,
but these funds can make sense if you want to obtain a tax deduction now but
take your time in determining or making payments to the recipient charity or
charities. These funds can also be a way to establish a family philanthropic
legacy without incurring the administrative costs and headaches of
establishing a private foundation.
This publication is distributed with the understanding that the author, publisher and
distributor are not rendering legal, accounting or other professional advice or
opinions on specific facts or matters, and, accordingly, assume no liability
whatsoever in connection with its use. The information contained in this newsletter
was not intended or written to be used and cannot be used for the purpose of (1)
avoiding tax-related penalties prescribed by the Internal Revenue Code or (2)
promoting or marketing any tax-related matter addressed herein. © 2014