Use the 2010 Tax Extension As Part of Your NPO’s Giving Plan
Paul and I recently researched the philanthropic impact of the recent tax extension. There is great news for NPOs in this legislation! In our review we believe that there are aspects that you should prominently and aggressively communicate to both your NPO’s prospects and donors.
Put simply, the tax legislation passed by the lame-duck Congress is great news for philanthropy and for prospective donors. The caution is that this window is open for relatively short periods and needs to be publicized on a number of levels. Since we are in July, the clock is running and action needs to be considered in the very near term. Tax laws are always in flux. Who knows what will happen in 2013?
Gardner & Associates recommended on June 15 that its clients consider focusing information to donors to five aspects of the legislation:
1. Cut in payroll taxes: In 2011 employers and employees are having their wage withholding reduced by 2% to 4.2%. This cut means that an employee earning $100,000 will receive an additional $2,000 in 2011. The employer has a savings also with its match. Prospects can use this “windfall” to realize one-time philanthropic goals.
2. The Bush tax cuts were extended intact for 2011 and 2012. This includes lower income tax rates and lower long-term capital gain tax rates. This applies also to qualified dividends. The top rate is now 15% down from 25%. A double benefit can be gained by giving property with long-term capital gains. One, the charitable deduction for the value of the property and two, avoiding the capital gains tax that would result from selling the property.
3. The “marriage penalty” relief provision remains in effect for
2011 and 2012. That provision doubles the standard deduction and widens the tax bracket for joint filers.
4. IRA Charitable Rollover extension: IRA owners at age 70 1/2 or older can once again direct a qualified charitable distribution from their IRA to a charity for 2011 only.
Anyone over 70 1/2 with a traditional IRA must take an annual distribution. This rule applies even though the individual is still employed and even if he/she does not need the money.
There are two key benefits to this gift option that make it attractive. First, the amount distributed from the IRA is excluded from the donor’s income for federal tax calculations. Second, the amount distributed to the charity from the IRA counts toward the donor’s required minimum distribution for that year.
5. Reduced estate taxes: The taxable estate exemption is set at $5 million ($10 million for married couples) in 2011 and 2012.
The top estate provision is set at 35% down from 45%. All this good news eliminates tax on many estates and reduces the impact of federal estate tax on larger estates for the near future. Also, a provision to provide full portability for unused exemptions for surviving spouses.
Gardner & Associates is not a tax consultant firm. We are simply notifying our clients and friends of significant tax benefits that could attract high-value prospects to consider a charitable gift in this positive tax atmosphere. Encourage your prospects and donors to talk to their advisors to ensure that each maximizes his/her overall planning and wealth management goals.
Enjoy communicating great news to your donors and prospects!
Have You Heard of Arkansas Correctional Industries?
Recently, Gardner & Associates met with Ray Herndon, one of four sales representatives for ACI (870.489.4255 or firstname.lastname@example.org) to learn about the array of products that ACI can provide at amazing pricing to Arkansas NPOs. Check out their vast product line at www.acicatalog.com.
ACI offers many items that NPOs routinely purchase: binders, flyers, membership forms, binding, business cards and paper. They also have an amazing array of furniture and equipment.
What G&A appreciated about this opportunity is that it helps inmates learn real-world skills and prepares them for a productive career. It also helps that the pricing is very attractive to NPOs in a tight economy.
If all you thought that ACI did was make license plates, check out their website and see how they can help your NPO hold the budget line.