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Tax changes offer year-end giving options, advisor says

Monday, December 27, 2010

As the calendar year comes to an end, so do chances to affect tax obligations for the next tax cycle. Some opportunities exist to avoid taxes in making gifts to not-for-profit organizations, like the Monett Area YMCA, according to Don Weber, financial advisor with Edward Jone Investments in Monett.

"People may not realize that when they gift securities, like Jack Henry stock, to any non-profit organization, the value of your securities may have gone up over the years," said Weber. "You get the tax deduction for the current value of the security the day you gift it. If you sold the stock and gave cash, you would have to pay taxes on those gains.

"If the gift the stocks and the non-profit sells them, they have no taxes associated with it. Thos taxes are completely avoided," Weber said.

The benefit also works in donating land to a non-profit, Weber added.

Renewal of the Bush-era tax cuts also opened another door in donating to not-for-profit charities. Weber said tax laws require people with individual retirement accounts (IRAs) to withdraw a specified minimum amount when they reach age 70 1/2. The amount withdrawn would be subject to taxation and considered to be income.

Under the extension just passed, the minimum required amount withdrawn from an IRA can be gifted to a non-profit without any tax obligation.

Weber advised anyone seeking to clarify their tax status to maximize their options to consult with a tax advisor. Any actions taken by the end of Dec. 31 can be included in the tax write-offs due by April 15, 2011.



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