From the BlogSubscribe Now

Strategy for tax efficient charity

There are more than one standard tax planning implementations. We all like to give donations to charity but how does one do it in the most tax-efficient way? We must keep in mind that one key idea is that this tax strategies are implementation decisions. The cost of donations are muffled by and through Tax strategies. So that charitable donations can be tax-efficient, we must consider one of the following implementations strategies.

Contribute to a Donor Advised Trust

You can separate tax planning from charitable gifts by means of donating to a donor advised trust. You  can do this by donating cash or appreciated securities to an account being held at a brokerage firm or with a charity functioning like an escrow account for charitable gifts you are donating. You get the potential charitable deduction on the year that it was made. You can then advise the fund to distribute gifts to the charities you have chosen at the time or at your own pace. This strategy is a way wherein you can shift charitable deductions into the year that is most beneficial for planning your tax.

Set up a Charitable Gift Annuity

You can turn appreciated securities into lifetime income with Charitable gift annuities. You can even get a large charitable deduction on the year it was made through a large charitable gift plus a stream of lifetime taxable income. When interest rates are high, this strategy is the best thing to use for greater benefit.

This strategy will provide you a hassle-free, low administrative way of turning securities that are appreciated into lifetime fixed income.

Set up a Charitable Remainder Trust

Setting up a charitable remainder trust as opposed to gift annuity strategy allows you to turn appreciated securities into income. But in this case there is more investment risk to deal with and this also lessens your protection against long term risk. Based on these strategies explained here, one can see the best strategy to take. The path which will protect you from risk exposure. It is a good idea to weigh these options to better benefit from them.

TaxEfficient1 TaxEfficient2

images from: blog.paulahogan.com  and www.wealthmanagement.ml.com