Do you want to make an immediate impact on ministry today and maximize your charitable deduction? Then you probably like to give cash because it’s simple and straightforward. A gift by check is one of the most common methods for making an outright charitable contribution. For gifts by check of $250 and more, donors must have written confirmation from the ministry, as IRS rules have changed and canceled checks are no longer sufficient proof of a deductible gift at this level. Cancelled checks are acceptable for checks of less than $250. True cash gifts (not checks), regardless of the amount, must be evidenced by a receipt from the charitable organization.
Here's something for you to consider. You establish a Named Fund with the Florida Baptist Foundation. You then make a gift to the Foundation into your Named Fund and later request a payment to your favorite charity whenever you desire to. Your Fund grows over time. Some years you can afford to add more to your Fund, some years maybe less. You can get a full tax deduction for your contribution in the year you make it. The Fund has great flexibility and gives you immediate and maximum tax deductibility.
The Rewards of Making Charitable Gifts
Many people are surprised to learn that the gifts they make to charitable organizations, such as your favorite Baptist cause, can also bring personal financial benefits. To encourage philanthropy, federal law provides you a number of tax breaks for charitable gifts, depending on the type of asset you donate and the giving method you choose:
Income tax deduction. If you regularly itemize deductions on your federal income tax return, the first tangible benefit from an outright charitable gift is an income tax charitable deduction. The deduction is limited for gifts of cash to an overall maximum of 50 percent of your adjusted gross income in any year; you may, however, carry the excess deduction forward for five years. There is a special 30 percent limitation on certain capital gain property.
Capital gains tax avoidance. If you sell an asset that you have owned more than a year, you pay up to a 15 percent capital gains tax (28 percent for "collectibles") on any appreciation (plus any applicable state tax). By donating the asset instead, you eliminate the tax on any capital gain.
Federal estate tax reduction. Any gift you make today reduces the value of your estate at your death. The result is a reduction in the federal estate tax, which might otherwise be due when your beneficiaries inherit your estate.
Keep reading below for more ways to make charitable gifts.
You have now discovered that you can give more at less cost than by giving cash. That’s because, with appreciated securities -- stocks or bonds that are now worth more than they were when you purchased them. You have discovered that to gift securities as gifts to a number of different ministries is a difficult challenge. Is there a better way?
Let me suggest another way; you simply donate the appreciated securities to your Named Fund at the Foundation. You get the maximum tax deduction -- in fact, if the deduction is larger than you can use in one year, you can use the surplus as deductions over the next five years. The ministries that are supported by Your Fund will benefit.
Existing Life Insurance
Have you been paying premiums on Life Insurance for years and now the protection is no longer needed? You can donate the life insurance policy to your Named Fund or simply name your Fund as the beneficiary. For the gift of a paid-up policy, you will receive an income tax deduction equal to the lesser of the cost basis of the policy or the replacement cost. To qualify for the federal charitable deduction on a gift of an existing policy, you must name the Foundation as owner and beneficiary.
Consider donating the policies to your Named Fund. You get an immediate tax deduction now, usually equal to their cash surrender value. Your Fund grows and ministries benefit.
3 Ways to look at Life Insurance
Maybe you have considered that your need for life insurance has most likely declined with age and you want to leave a charitable legacy when you're gone. But you don't have a large estate. Here are 3 ways to look at life insurance in making a gift.
Let it go. An outright gift of a paid-up life insurance policy makes an excellent charitable gift. Either your favorite Baptist cause will take a policy's cash value or we will retain the policy for its ultimate death benefit. You receive a current deduction amounting to the cost of replacing the policy with a single premium life insurance policy at your current age (but not more than you've invested in the policy).
Start anew. You can take out a new policy with us as owner and beneficiary. Your continuing premium payments, usually gifted directly to your favorite Baptist cause, are income tax deductible.
Pay the premiums. You can also donate an existing policy and keep up the premiums. If you should lapse on the payments, your favorite Baptist cause can either receive the current surrender value of the policy, buy a smaller, get paid-up policy with the policy's cash value or possibly even continue the premium payments for the life of the insured. Group term life insurance or employer group coverage above $50,000 also make suitable gifts to charity.
You call your insurance agent and arrange for a life insurance policy to be owned by the Florida Baptist Foundation. You make a tax deductible gift to the Foundation which we use every year to pay the premium. You also file with us a letter telling us how you wish the proceeds to be used when the policy matures. All of the benefit can go to your Named Fund for its charitable purposes or you can create designated funds to continue your lifetime support of your favorite charitable ministries. You can update your recommendations as often as you wish.
If you own property that is fully paid off and has appreciated in value since you acquired it, an outright gift may be the simplest solution. You can deduct the fair market value of your gift, avoid all capital gains taxes and remove that asset from your taxable estate.
Since you are dealing with Real Estate – please understand that restrictions that may apply. But in the simplest method you gift the property to the Florida Baptist Foundation. The property can then be sold by the Foundation to establish your Named Fund or the proceeds could be used to set up an income trust to provide extra income during your lifetime (see Life Income-Fixed Amount (CRAT) or Life Income-Variable Amount (CRUT)). Or you might request that the property be used to house a charitable ministry in which you have an interest. In any event, you will be entitled to maximum tax advantages as a result of your gift in addition to feeling that your property will be put to good use for community charitable purposes. Some restrictions apply to property so best to contact us as soon as possible.