Year-end planning is a ritual for people who coordinate their tax planning with their charitable giving. Anticipating the end of the year takes on additional significance as we adjust to ever-changing tax laws and shifting financial markets. Completing a gift by December 31 can help you reduce your tax bill for this year while making a diff erence for future generations. Let’s look at some ideas that can be important to year-end planning.

Cash is the simplest and most popular type of charitable gift. When you itemize deductions, a cash gift is deductible up to 60% of adjusted gross income. Your actual tax savings depends on the amount of your gift as well as your marginal income tax bracket.

You can also make gifts to us with appreciated stock or mutual fund shares (held for more than one year) and enjoy even greater tax savings. When you itemize, you receive an income tax charitable deduction for the full fair market value of the shares and you owe no capital gains tax on the appreciation, even when the gain has never been taxed. By leveraging an untaxed gain to generate tax deductions, you substantially reduce the tax on your reportable income.

Because the tax law rewards gifts of long-term appreciated property, you actually can have a greater impact with your gifts at a lower cost.

Note: Your deduction is limited to 30% of your adjusted gross income (AGI). When your deduction exceeds the 30%-of-AGI limitation, you may carry over your excess deduction for up to five years

Life income gifts are gift arrangements that pay you an income, provide immediate tax savings, and ultimately leave a gift that will have an important impact on our programs.

One of the most popular life income gifts is a charitable gift annuity. In exchange for your gift, we promise to make fixed payments for your lifetime and you qualify for an immediate income tax charitable deduction.

Charitable gift annuities are easy to set up. You can get started simply by calling our office. In fact, they are so popular that many of our donors have more than one. A gift annuity can provide you with an excellent opportunity to make a deductible year-end gift and receive a welcome boost to your retirement income.

Let’s look at some additional long-term gift planning ideas that merit special attention.

A gift in your will. As you plan for loved ones, you may want to include a gift in your will for a charity that can make a difference. You can leave:

• A specific dollar amount or specific property
• A percentage of your estate
• What’s left of your estate after other bequests, taxes, and settlement costs are satisfied

Beneficiary designations. You can name us as the beneficiary of a living trust, life insurance policy, or retirement plan account. Retirement plan assets in particular can pose tax problems for heirs, while other savings and investments can be transferred to heirs with no additional tax—and sometimes even with a step up in basis. A planned gift to us, however, can reduce or eliminate these taxes on retirement assets and, at the same time, provide more for family members by allowing other assets to transfer free of tax.

Other life income plans. In addition to a charitable gift annuity, you may want to consider a charitable remainder trust. Both of these unique planning tools give you the opportunity to realize a wide range of long-term objectives, such as supplementing your retirement income or providing for a dependent relative.

GIFTS BY CHECK OR CREDIT CARD
When you write a check to us and mail it by December 31, you can deduct it this year, even if we don’t cash it until next year. When you charge your gift to a credit card, you can deduct the gift in the year the charge is posted to your account.

PLEDGES AND IOUS
If you make a pledge to charity or give an IOU, you can only deduct this as a charitable contribution in the year you actually satisfy the pledge or pay off the note.

GIFTS OF STOCK
You can make a gift of stock by electronic transfer or by personally delivering or mailing the actual stock certificate. Ownership of the stock certificate is changed to the charity on the books of the corporation issuing the stock.

GIFTS OF APPRECIATED PROPERTY
We already discussed the benefits of gifts of appreciated stock—you can generally deduct the full value of the contributed property (subject to the 30%-of-AGI limitation) even though the gain has never been taxed. Keep in mind that this applies to all appreciated property, including stocks, bonds, mutual funds, real estate and, in some cases, collectibles.

OPTION FOR LOSS PROPERTY
“Loss property” is property that would generate a tax-deductible loss if you sold it. If you gave this property to charity, you would lose your deduction for the property’s loss in value. Instead, consider selling the property, taking the loss as a deduction, and using the proceeds to make your deductible charitable gift.

SPONSORED GIFTS
If your employer offers a matching gift program, multiply the impact of your gift simply by requesting the match from your employer.

Note: You can only deduct charitable contributions if you itemize deductions on your tax return.

Outright gift of cash.This is a simple gift to implement. You just transfer cash, write a check, or use your credit card. The gift is fully deductible up to 60% of AGI with a 5-year carryover of any excess deduction.

Outright gift of long-term appreciated securities. Easy to carry out and the most popular non-cash gift. Just transfer possession and any document of title to charity. The gift is deductible up to 30% of AGI, with a 5-year carryover provision. There is no capital gains tax owed on the appreciation.

Charitable remainder annuity trust (CRAT). A CRAT will pay you or another benefi ciary a percentage of the initial value of the assets donated to the trust for life or for a period of up to 20 years. There is no capital gains tax when you transfer appreciated property to the CRAT. You can deduct the present value of the charity’s remainder interest, subject to the 60% (cash gift) or 30% (long-term appreciated property) of AGI limitation.

Charitable remainder unitrust (CRUT). A CRUT will pay you or another benefi ciary a percentage of the value of the trust assets as revalued each year—if the value of trust assets goes up or down, so does the payout amount. There is no capital gains tax when you transfer appreciated property to the CRUT or when the trustee sells the property. You can deduct the present value of the charity’s remainder interest, subject to the 60% (cash gift) or 30% (long-term appreciated property) of AGI limitation. A CRUT is more flexible than a CRAT and can act as a hedge against inflation.

Charitable gift annuity. Transfer cash or appreciated property to charity and receive back fi xed payments for life. The payment amount is based on the age(s) of the benefi ciary(ies) and is partly tax-free until the benefi ciary reaches life expectancy. If you give appreciated property, you can recognize some of the capital gain pro-rata over your life expectancy (if you are the primary benefi ciary). You can deduct the value of the property given, minus the present value of the income stream from the annuity, subject to the 60% (cash gift) or 30% (long-term appreciated property) of AGI limitation.

Life insurance. You can use life insurance to make tax-wise charitable gifts. An irrevocable assignment of a paid-up life insurance policy can generate an income tax deduction that refl ects your cost basis in the policy or its replacement value (whichever is lower). Alternatively, you can give other assets to charity, then use a life insurance policy to eventually replace the wealth in your estate that you contributed to charity during life.

Qualified charitable distribution. If you are age 70½ or older and own an IRA, you can make a gift using a direct transfer of funds from your IRA to a qualifi ed charity. Transferred amounts count toward your required minimum distribution (RMD) if one is due, but no tax is due on the distribution (up to the $108,000 annual aggregate limit in 2025). At any time during the year, you can simply notify the IRA custodian to make a direct transfer from your IRA to us. This is not only an easy way to give, but it can play a strategic role in your annual planning and have an immediate impact on our mission.

A one-time life income QCD option is also available. You can use up to $54,000 (in 2025) to fund a new charitable remainder trust or charitable gift annuity—a great way to support our work and create a lifetime income stream. You owe no tax on the distribution and it counts toward your RMD if one is due (generally, age 73 and older). Spouses can each contribute up to $54,000 (in 2025) from their own IRAs to fund a single charitable remainder trust or a joint-life charitable gift annuity.

Want help fi nding and implementing rewarding year-end planning strategies with unique combinations of tax savings and personal satisfaction? We value your support and are committed to helping you and your advisors explore the best planning options for your goals and situation. Reach out today!

ABOUT THE COMMUNITY FOUNDATION OF BOONE COUNTY

The Community Foundation of Boone County exists to unite people, organizations, and philanthropy to create a thriving community for all. Since 1991, its leaders have worked to empower and engage local communities to make a difference right here in Boone County, while also leading a vision to collaboratively address the root causes of challenges facing Boone County in diverse and equitable ways. The Community Foundation continues to invest in the people working to fill local needs and has granted more than $31 million to nonprofit organizations and programs working to solve critical challenges in Boone County. With nearly $38 million in assets, the Community Foundation works with donors to create permanent funds for charitable giving, to strengthen Boone County for generations to come.