What tax deduction will I receive for my gift?
Your tax benefits will depend on several factors: the type of gift, the time at which it is made, whether it is outright or deferred or has any income payments. In general, though, here are some guidelines:
I want to set up a life insurance policy, name Mount de Sales Academy as beneficiary, but retain ownership of the policy. Can I deduct the premium payments I make?
- Outright gifts to Mount de Sales Academy generate a full income-tax charitable deduction. Outright gifts of appreciated securities are deductible at fair market value, with no recognition of capital gains - a great tax benefit!
- Bequests do not generate a lifetime income tax deduction. They are exempt from estate tax.
- Similarly, life insurance distributions to Mount de Sales Academy are not income-tax deductible, but are exempt from estate tax. If you have made us the irrevocable owner and beneficiary of a policy during your lifetime, you may deduct annual gifts that offset premium payments.
- The charitable deduction for a gift that returns income to you, such as a charitable gift annuity or a charitable remainder trust, is the fair market value of the gift asset minus the present value of the income interest you retain.
No. The IRS would not consider that a "completed gift" - they will say that, as the owner of the policy, you could change the beneficiary designation to a friend or family member. We must be made the irrevocable owner of the policy for gifts offsetting premium payments to be deductible.
I heard that transferring gifts of IRA assets to charity are advantageous. Why?
Qualified retirement plans such as IRAs, 401(k), 403(b), and Keoghs allow individuals to defer paying taxes on a portion of their income until the assets are withdrawn during retirement years. However, after a person's death, these accounts are often exposed to income and estate taxes, at a combined rate that could rise to 75% or even higher on large taxable estates. The tax will be paid at some point by your estate and your heirs unless contributed to charity. In other words, by giving retirement assets to charity you receive double benefits. Your estate and heirs will not be taxed on the portion that goes to charity and you will support Mount de Sales Academy!
Can I transfer my IRA to Mount de Sales Academy to set up a life-income gift, and avoid income tax on the transfer?
Under present law, any lifetime distributions from an IRA are included in your taxable income, even if these funds are transferred to us. You do, however, receive a current charitable deduction when you establish a life income gift, which would partially offset the amount included in your taxable income. Speak with your tax attorney or tax preparer for updates on this matter and additional information as legislation may change.
If I create a bequest or life-income gift, will you continue to ask me for annual contributions?
Your planned gift is a significant addition to our long-term financial strength and our ability to meet the challenges and opportunities the future will bring. However, today's efforts are supported through annual gifts and we greatly appreciate and encourage any annual support you may want to consider.
What sort of gift plans also return income to me?
There are several options for making a gift that returns income to you, your spouse or other family members. Among these options are a charitable gift annuity or charitable remainder unitrust.