A Time for Giving

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Recently, my boyfriend and I decided to take part in our church’s Christmas donation for families in need. We picked a family number and were given a paper with a family of kids’ names, ages, gender and a couple of presents on their Christmas list. To our surprise, our list had 5 kids ages 1, 3, 5, 7 and 15. The kids were a blast! The teenager was a little tougher but we finally ended up getting everything the family asked for and it was a wonderful experience that I highly recommend. This leads me to my end of the year topic…gift tax exclusion!

To qualify for a gift tax deduction, the gift must be less than $14,000 for an individual and $28,000 for joint filers (make sure to keep records of your purchases). The gift can be to a qualifying charity, to pay for tuition or medical expenses for someone else.

Cash

For cash donations, you can write off the full deduction as long as it is under maximum deduction amounts. Be sure to keep receipts for your cash donations!

Stocks Owned in Taxable Accounts Over 1 Year

Appreciation: The deduction is taken as of market value at the date of the gift and you also avoid taxes on capital gain appreciation.

Underperformance: You can sell the property to realize losses. If losses also exceed your gains, you can offset capital losses up to $3,000 against other income. Losses can also be carried off year after year. Then you can donate the cash and write off the full deduction.

Stocks Owned in Retirement Accounts

If you are over 70.5, you can donate up to $100,000 dollars out of IRA’s. These distributions are tax free and they also qualify as Required Minimum Distributions.

Educational Gifts 

Educational Gifts must be a payment made specifically to the educational institution for tuition only and cannot exceed maximum deduction amounts.

Medical Expense Gifts

Similar to the educational expense gift, the payment must be made explicitly to the medical institution providing care or the insurance company. The insurance amount is separate from the medical expense deduction.

Let’s face it, we all love to give gifts during the holidays so why not take advantage of your generous heart and reduce your taxable income at the same time.

This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified advisor.  This material is for general information only and is not intended to provide specific advice or recommendations for any individual.  To determine what is appropriate for you, consult a qualified professional.

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