“Deduct Now, and Give Later”

The New Year is almost here and the giving season is in full swing. People are donating to charity more than usual and they must make numerous decisions during uncertain tax law changes.  With the fiscal cliff deadline just weeks away, we know changes in government spending and taxes are looming. One major tax change Taxpayers fear is that Washington will cut tax deductions for charitable gifts as soon as next year.

This very concern is addressed in a recent Wall Street Journal article titled “Deduct Now, and Give Later”. Author Laura Saunders highlighted the value of Donor Advised Funds as she offers the following scenario where a Donor Advised Fund would make sense to set up before 2012 ends:

“…a couple earning $200,000 gives $20,000 in cash to a charitable fund this year. They take a 2012 deduction for $20,000, and the money goes into a subaccount in their name at a sponsoring nonprofit organization.

Once in the subaccount, the money is invested and can grow tax-free until the couple designates eligible groups to receive it, at which point there isn’t any deduction. There isn’t a required annual payout, so the couple might give nothing in 2013 and then a large donation in 2014, to one church, charity or school—or many. The sponsor handles all tax paperwork, and some allow payouts of as little as $50.” 

The Stewardship Foundation can assist donors and investors in setting up a Donor Advised Fund and help them receive a tax deduction for 2012 up until December 15, 2012.

For more explanations and charitable giving ideas, visit our ‘Donors’ Webpage.