A qualified tax professional can advise you on the best methods for your situation. Here are a few strategies to consider when gifting:

  • Take advantage of the annual gift tax exclusion. It allows you to give away up to $14,000 to as many people as you wish without those gifts counting against your $5.49 million lifetime exemption. If you’re married, you and your spouse can each give $14,000, or a combined $28,000, per recipient. 
  • Donate your required minimum distribution to charity. Taxpayers age 70½ and older can typically exclude what otherwise would be taxable distributions from an IRA if the money is paid directly to a charity. Qualified Charitable Distributions (QCD) must come from traditional or Roth IRAs (not a pension or 401(k) plan), and the charities must be 501(c)(3) organizations. The maximum QCD is $100,000; however, your spouse can also make a $100,000 gift if you file a joint income tax return. 
  • Transfer ownership of an investment. Gifting stock has become a popular way for many investors to be charitable to your favorite cause. Let’s say I held stock in an energy company for a long time. If I sold that appreciated stock myself, I’d have a huge tax bill. But if I gift it, I’ll likely get a deduction for the market value and can possibly avoid paying capital gains tax.
  • Create a trust and fund it for your family or any number of charities. You’ll have the blessing of knowing these beloved beneficiaries will be taken care of, as well as how and when. 
  • Maximize giving by using life insurance policies. Charitable gifts from life insurance are usually thought of in the context of the charity receiving a future death benefit. But there are multiple ways to turn even a small premium into a substantial tax-free gift. 
  • Designate an individual, charity or trust as a beneficiary. This will help the recipient bypass any arguments about the gift and can avoid the delays (and costs) of probate court.

    Clearly, all of these strategies require some thought and take proper planning to put into place. Make time now to work with a professional to maximize your gifting ability, and to make your gift tax-efficient for both you and the recipient.

Eric Mattinson

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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