Volume A4 Issue 2007

If you are someone who regularly makes charitable contributions, you may be interested in evaluating your charitable giving as part of tax planning for 2007. With proper planning, you will be able to maximize your charitable giving as well as your charitable contribution deduction. As you are probably aware, your charitable contribution deduction is subject to limitations depending on your adjusted gross income, your other itemized deductions, the type of property donated, as well as any contribution carryovers that may be expiring.

If your charitable contribution is limited due to your adjusted gross income, you are only allowed five years to carry forward and utilize any disallowed deduction. After five years, any unused charitable contribution deduction is lost. Before making any additional charitable contributions, you may wish to defer any planned contributions to future years in order to utilize existing contribution carryovers before they expire.

If your charitable contribution is limited due to the phase-out of your itemized deductions, any deductions subject to this limit, including charitable deductions, which are disallowed, are lost permanently. If you are subject to the itemized deduction limitation, it may be advisable to defer income if possible in order to reduce the phase-out limitation.

If you have appreciated assets, you may wish to consider donating the asset rather than selling the asset and donating the proceeds. Using this approach will allow you to avoid any capital gains that would result from selling the asset. However, there are additional limitations and elections that must be considered when donating assets instead of cash.

Charitable giving can be complicated yet it provides numerous tax benefits. In order to maximize all of the tax benefits associated with charitable giving, proper planning is required. Please contact our office if you would like to discuss this further or if you require any additional information.