Dodge the Tax Bite At the End of the Year
Start Planning Now to Meet Gift Deadlines And Be Aware of Gift Deadlines
• Checks—The mailing date is the date of the gift.
• Credit cards—The day the charge is authorized is considered the gift date.
• Pledges—Pledges are deductible in the years they are fulfilled, not the year the pledge is made.
• Securities—If securities are electronically transferred to us, the gift date is typically the day the securities enter our account. If securities are mailed, the mailing date is the gift date.
• Real estate—The day you deliver the signed deed to us is the date of the gift.
• Artwork and other tangible personal property—The gift date is the day you deliver the property with a signed document transferring ownership, if necessary.
Follow these three steps to take advantage of tax-saving strategies as you think about your charitable and financial priorities at year-end.
1. First Things First
To begin, make a list of the causes you would like to support. For an idea of tax liability, If, for example, you sold appreciated assets this calendar year, or if for any other reason you may have a larger-than-normal tax bill, move forward some of your anticipated giving for next year to create a larger deduction this year.
2. Get a Charitable Income Tax Deduction
Cash, real estate, personal property and stocks are among the most popular charitable gifts. Depending on the gift, you are generally eligible for a charitable income tax deduction that can be as high as 30 to 50 percent of your adjusted gross income.
3. Watch the Calendar
All gifts must be completed by Dec. 31 to qualify for an income tax deduction this year. The gift date—the date used for tax purposes—is the day you transfer control of the asset. And that depends on the asset and your method of giving.
Are You Prepared for 2013 Tax Law Changes?
If you have been putting off creating an estate plan or haven’t updated it in years, upcoming changes in tax laws might spur you into action.
• Estate Taxes: Big changes here. The basic estate tax exclusion amount—the amount you can own before your estate is subject to estate taxes—drops from $5.12 million in 2012 to $1 million in 2013. The top estate tax rate also increases from 35 percent to 55 percent.
• Income and Capital Gains Taxes: In 2013, capital gains taxes will increase from 15 to 20 percent and the top income tax rate will increase from 35 percent to 39.6 percent in 2013.
• Gift Tax Exemption: The gift tax exemption decreases from a $5.12 million exclusion amount unified with the estate tax exemption to $1 million in 2013. The top gift tax rate will rise from 35 percent to 55 percent. The annual gift tax exclusion—the amount you can give to anyone gift tax–free each year—remains at $13,000 ($26,000 for married couples).
• Portability: For 2011 and 2012, if one spouse died without using up his or her federal estate tax exemption, the unused portion could be transferred to the surviving spouse. This is called a portability provision. In 2013, however, portability between spouses ends.
If you have questions or concerns about how the coming tax law changes will affect you, contact your financial advisor or estate planning attorney. We’re also happy to help you create a plan that benefits you and the National MS Society. Please feel free to contact us at 800-923-7727 or email@example.com
*The above information is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.
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