We’re counting down the days until Christmas and also counting them down to the end of 2019. We’ll save for another day the question of how it could already be 2020!
With the end of the year seems to come a wave of generosity that manifests itself in not only gifts under the tree but also in an annual rush of charitable giving. In fact, December tops every other month for the number of gifts made to affiliated funds of Nebraska Community Foundation, including our local funds.
While some of that is, I’m sure, the impact of tradition and feelings of goodwill toward our neighbors, some is also pragmatic considerations, like tax planning. Not exciting, I know, but significant to many families nonetheless. Because when it comes to charitable giving, cash is far from the only way to contribute to the causes and organizations you care about most. Real estate, life insurance and ag commodities are all being used by Nebraskans to give back to the non-profit organizations and hometowns they hold dear.
At NCF, we regularly work with donors and their professional advisors to identify the best ways to meet their charitable giving wishes. For many donors, not only does that mean support to their favorite causes, but also tax-wise benefits that can prove advantageous to their own finances.
For people who are age 70½ and older, a charitable IRA rollover has become a favorite tool for year-end tax planning. People may transfer up to $100,000 from an IRA directly to charity – tax free. Their tax-free rollover gift will be excluded from their gross income and count toward their required minimum distribution. And most donors are surprised how easy they find the process of setting up a Charitable IRA Rollover.
Here are just a few of the benefits of setting up a Charitable IRA Rollover:
- You can avoid taxes on transfers of up to $100,000;
- Fulfill your required minimum distribution;
- Reduce your taxable income;
- Make a gift that is not subject to the deduction limits applied to other charitable gifts;
- And of course, help further the work of your favorite charitable organization.
Another idea that’s not new but continues to gain momentum is giving gifts of ag commodities. Farmers and ranchers can use gifts of grain and livestock to maximize tax benefits and possibly provide a larger gift than by simply writing a check. In Columbus, Boone County, and other “NCF towns” such as Diller, Shickley, Chambers, Stuart, Stratton, and Atkinson producers are saving significantly on their taxes by contributing commodities like grain or livestock to their local community foundation fund. Byron, a community of just 83 people, built a million-dollar community center thanks in large part to generous gifts of grain from community members.
When using this tool, the commodity is given to a charity and the producer can then claim all their production costs as deductible expenses for income tax purposes. When a producer transfers legal ownership to a charity, like one of the local NCF affiliates, before it is sold, the producer will not have taxable income from a sale, thus minimizing their taxes. All in all, it’s simply a better way to give to charity.