Year End Giving

By: Richard Carnes

Making charitable gifts is both an opportunity to express thankfulness for the blessings of life and an opportunity to make a difference in your community through a favorite charitable ministry. It’s also an excellent way to reduce your tax obligation for the year.

A tax deduction for charitable giving isn’t guaranteed just because you’re generous. As with everything in tax law, it’s important to follow the rules. By doing so, you can help ensure that your donations result in maximum benefits for you and the charitable ministries you support through your gifts.

The Internal Revenue Service offers the following reminders to help taxpayers plan their gifts to charity:

· Qualified charities. Only donations to eligible organizations are tax-deductible. Select Check, a searchable online tool available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches are eligible to receive deductible donations. That is true even if they are not listed in the tool’s database.

· Year-end gifts. Contributions are deductible in the year made. Donations by check count for 2019 as long as they are mailed in 2019. Also, donations charged to a credit card before the end of 2019 count for 2019, even if the credit card bill isn’t paid until 2020.

· Itemize deductions. For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction.

· Record donations. The long-standing requirement of the IRS is that a taxpayer obtain an acknowledgement from a charity for each deductible donation (either cash or property) of $250 or more. Also, be aware that additional rules apply for a property contribution of $250 or more.

As you begin to look beyond 2019, you may also wish to consider arranging for future charitable gifts that result in immediate tax and other financial benefits. By doing so, you may be able to enjoy tax savings, increased income and other financial advantages today while providing for a significant charitable gift to a favorite Baptist ministry as part of your long-range planning.

Richard Carnes is president of the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; www.KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.

Year End Tax Planning

By: Laurie Valentine

With December 31 fast approaching, now is a good time to review tax planning actions that you have already taken this year and to discuss with your tax adviser other things you may be able to do before year-end to further reduce your 2016 income taxes.

If you will be in a lower tax bracket in 2017, it may be prudent to defer some of this year’s income until next year and to pay deductible items that you would normally pay in early 2017 before December 31, 2016.

Business and professional people who use the cash accounting method may be able to defer the receipt of income by not billing until year-end for services rendered in 2016. The receipt of a bonus that your employer is free to give or not give can be deferred into next year to lower your 2016 compensation income.

Pay real estate taxes and the January 15 installment of state and local income taxes before December 31 to accelerate these deductible items into the 2016 tax year. If possible, pay all medical bills, if the total will exceed 7.5% of your adjusted gross income, before year-end to be able to use that expense as a deduction, if you itemize.

Another income tax deduction that is very easy to accelerate is the charitable deduction. You have total control on when this deduction will be available; all you have to do is complete your charitable gifts before December 31.

Make time for year-end tax planning with your advisers; it can beneficial to you and to the charitable causes you wish to support.

Laurie Valentine is COO and Trust Counsel for the Kentucky Baptist Foundation, PO Box 436389, Louisville, KY 40253; (502) 489-3533 or 1-866-489-3533 (Toll-free, Kentucky Only); KYBaptistFoundation.org

The information in this article is provided as general information and is not intended as legal or tax advice. For advice and assistance in specific cases, you should seek the advice of an attorney or other professional adviser.