Gift Annuities
Many people leave assets to their favorite
charity in their will. But this is a foolish idea because it
wastes a tax reduction, a retirement
mistake. You can make the charitable gift during life, retain
the income from the assets and also get a tax deduction for the
gift to reduce your taxes right now.
The income you receive is based on your age
and is for your lifetime.
You can find the income amount you receive
at this web site, which updates the amounts each year (most charities
use these same tables): acga-web.org
Here is a simple example:
Mrs. Donor, age 82, gives $100,000 in a Gift
Annuity to a charity, in a single life annuity. She will receive
an annual annuity payment of $9,400 (figured at 9.4%). Her charitable
income tax deduction will be $52,810 the year the gift is given,
or spread over five years following. Of the $9,400 received each
year, Mrs. Donor can exclude $5,555.40 as tax exempt income for
10 years. That’s because IRS considers part of each payment a
return of principal, which is not subject to income tax. Also,
the gift is excludable from estate taxes.
Before approaching your favorite charity
with this idea, see a qualified financial advisor or estate planner
as they may be able to get you a better deal than you may be offered
at first.
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