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Making donations to the ministry in the same year as IRA distributions (especially RMDs) is a great way of offsetting income taxes on those distributions. It will also help reduce the ordinary income figure on your tax return, which may be helpful in boosting your social security and/or reducing the cost of Medicare coverage. You can also designate the ministry as your IRA beneficiary which helps take those assets out of your estate, therefor eliminating the income taxes your family members might otherwise have to pay. This is a great options when leaving a legacy type donation to the ministry is desired.

Most publicly traded securities are not taxed until the securities are sold and capital gains are realized. For some with securities that have grown considerably in value over the years, this can become a significant tax burden. However, if you’re considering making a donation to the ministry, there’s a way to do this while also saving you from having to pay those capital gains taxes. Here’s how it works. Rather than selling the security and donating the after tax proceeds, simply donate the securities directly to the ministry. Not only does this prevent you from having to pay capital gains tax on the appreciated security, it also gives you a tax deduction for the full market value of the appreciated security (up to 30% of the donor’s adjusted gross income).

Charitable Remainder Trusts can seem a bit complicated, but they’re actually quite simple when you break them down. The general principle behind a CRT is that you transfer appreciated assets to the trust, listing the ministry as the eventual beneficiary one day. The assets can then be sold tax free within the trust, and you as the donor will receive a lifetime stream of income from the trust. Though the income you receive will be taxable, you can receive a tax deduction in the year the assets are transferred to the trust (based upon a formula provided by the IRS) which may help offset those taxes. This is a great strategy for retirees with highly appreciated assets looking for a steady stream of lifetime income.

A Charitable Leads Trust is similar to a CRT, except that the income stream goes to the ministry and the eventual remaining assets go to family members or other beneficiaries. This type of strategy would be more applicable to someone looking for estate tax savings, as it’s a good way of getting assets to heirs tax free while supporting the ministry during your living years. Tax deductions may also be available to the donor, though they are calculated differently than with a CRT.

Another way of giving to the ministry would be through the use of basic life insurance. By making minimal monthly payments today (policy premiums), you could create a substantially larger payout to the ministry (death benefit) than might otherwise be possible. This not only provides an affordable way of supporting the ministry, it also establishes a legacy to insure the ministry’s future financial needs are met.
There are many tax efficient options available to individuals when it comes to charitable gifts. Finding the right strategy for your specific needs however can be somewhat of a challenge. If you’ve considered giving to the ministry and would like more information on choosing a gifting strategy that’s right for you, we encourage you to give us a call. We would be happy to speak with you regarding your needs, and put you in touch with one of our charitable gifting specialists at New Light Financial.