NPC CrossWord Dec 05 Page 3

Christmastime provides a wonderful opportunity to celebrate the birth of our Savior and spend time with those we love. As you enjoy the blessings of the season, we invite you to consider blessing the church with a special end-of-the-year gift. In addition to the pure joy that such giving brings, a member of another PCUSA Church offers some practical tax savvy advice about how you can give a little less to Caesar and use your money more effectively for the causes that mean the most to you.

AVOID CAPITAL GAINS ON APPRECIATED ASSETS LIKE STOCKS AND REAL ESTATE!

If a taxpayer has a capital gains property that has appreciated significantly in value, you could donate that asset to a charity and not pay income tax on the gain on that asset. You would receive an itemized deduction for the full amount of the fair market value of that asset. You would not be required to sell that asset and pay income tax on the gain if you transfer that asset to the charity and let the charity sell it, you can then claim a deduction for the full value of the asset. For example, you have a stock that you invested $1,000 in and that stock has appreciated to be worth five thousand dollars, you could donate that stock to the charity and receive a five thousand dollar deduction, if itemizing. For a taxpayer in the 25% tax bracket, they could save $1,250 in tax, $250 more than what they paid out of pocket for the stock at original purchase and also cover their giving.

THE NUTS AND BOLTS OF CHARITABLE GIVING:

Regardless of any personal benefit, charitable giving is “good for the soul.” Charitable giving is your “freedom of choice.” (Jerry Ann Spangler)

Charitable contributions are deductible on an individual’s income tax return and benefit those individuals by allowing them to pay less income tax to the federal government and in some cases their state.

The deduction to the federal income tax liability for an individual requires the completion of a form Schedule A, itemized deductions. Charitable contributions are added to items such as home mortgage interest, other interest, other state and local taxes, and if applicable, some medical expenses. All the previous items added together must exceed $4,750 for a single individual and $9,500 for those individuals filing a joint income tax return.

If an individual’s tax situation warrants, the individual could benefit by the timing and grouping of their contributions in a particular year. If married filing joint taxpayers add their normal charity giving to their other deductions and that total is close to $9,500 for a year, and their normal giving is in the range of $2,000 per year, those taxpayers could benefit significantly by bunching their charitable giving in one year versus spreading it over two years. In the preceding example, if the taxpayers were in the 25% tax bracket, their savings in federal income tax could be $500 by timing and bunching their contributions to fall into one year.

If you are unable to itemize, the standard deduction allowed by the government provides you a benefit for your contributions even though you did not itemize. It also decreases the amount of paper

work filed with the government since you do not have to report those deductions. Basically the federal government allows a single taxpayer $4,750 and married taxpayers $9,500 in standard deduction instead of itemizing those deductions.

Questions?

If you are interested in making a special end-of-year gift such as cash, stock, real estate or any other type of appreciated asset, please see Matt or contact Jack Crymes, Chair, Finance and Stewardship or Glory Hanna, Treasurer.

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