Ways to Give and Save on Taxes

(Consult your tax advisor for specific guidance.)

Did you know that giving to the church isn’t always done at the offering plate?

Your Finance Team would like to share some creative ways to support the church while potentially saving on taxes:

1. Charitable Contributions from an IRA (Qualified Charitable Distributions - QCDs)

  • How it works: Individuals aged 70½ or older can transfer up to $100,000 annually directly from their traditional IRA to a qualified charity, like a church.
  • Tax Benefit: The amount transferred counts toward the Required Minimum Distribution (RMD) but is not included in taxable income, which can lower overall tax liability and may help avoid higher Medicare premiums or taxation of Social Security benefits.

2. Donating Appreciated Assets (Stocks, Bonds, Real Estate)

  • How it works: Donors can transfer appreciated assets directly to the church instead of selling them.
  • Tax Benefit: The donor avoids capital gains tax on the appreciation and can claim a deduction for the fair market value of the asset, if they itemize deductions.

3. Naming the Church in an Estate Plan

  • How it works: Include the church in a will, trust, or as a beneficiary of life insurance policies, retirement accounts, or other assets.
  • Tax Benefit: Such bequests are typically exempt from estate taxes and allow individuals to make a significant impact on the church's future.

4. Donor-Advised Funds (DAFs)

  • How it works: Donors contribute to a DAF, receive an immediate tax deduction, and recommend grants to the church over time.
  • Tax Benefit: Contributions to a DAF are tax-deductible in the year made, and donors can distribute funds to the church when it's most beneficial.

5. End-of-Year Cash or Check Donations

  • How it works: Make a cash or check contribution before December 31 to claim it on that year's tax return.
  • Tax Benefit: Cash gifts are deductible up to 60% of adjusted gross income (AGI) if the donor itemizes deductions.

6. Donating Tangible Personal Property

  • How it works: Donate items like vehicles, art, or other tangible property that the church can use or sell.
  • Tax Benefit: The deduction depends on how the church uses the property, but donors often receive a deduction equal to the fair market value of the item.

7. Payroll Deduction or Employer Matching Gifts

  • How it works: Set up a recurring donation to the church through an employer’s payroll system, or check if the employer matches charitable contributions.
  • Tax Benefit: Automatic giving simplifies tracking, and matching gifts effectively double the contribution.

8. Charitable Remainder Trusts (CRTs)

  • How it works: Set up a CRT to provide income for a designated period, with the remaining assets going to the church.
  • Tax Benefit: CRTs can provide an immediate tax deduction, reduce estate taxes, and provide income during the donor’s lifetime.

9. Giving via Life Insurance

  • How it works: Name the church as a beneficiary or transfer ownership of a life insurance policy.
  • Tax Benefit: Premiums paid on a transferred policy may be deductible, and the church receives the full policy value tax-free.

10. Gifting Through 401(k) and Retirement Accounts

  • How it works: Individuals can name the church as a beneficiary of a 401(k), 403(b), or other retirement accounts.
  • Tax Benefit: Retirement account assets are heavily taxed when passed to heirs, but gifts to a church are tax-free.

General Tips:

  • Donors should consult their tax advisor to understand the specific implications of their gift.