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Charitable Giving: A Gift That Works for You in Two Ways

Lower your taxes while supporting your favorite charitable organization

December 6, 2012 - If you haven't already taken full advantage of the current tax laws - laws that may change significantly in the coming year - you still have time. Charitable donations are expenditures that pay you back.

The Plan by Age webpage provides a handy guide that explains what gift options can work best for you at your point in life. You can also consult a comparative view of giving options that can help you examine financial outcomes of various options to determine the gift type that makes most sense for your situation.

Here's one example: "Richard" has an annual adjusted gross income of $86,000 and plans to make a $1,000 cash gift to a qualified charitable organization. He has a combined state and federal marginal income tax rate of 28 percent, meaning he would save $280 in taxes on a $1,000 gift, or a net cost of $720.

The direct gift of appreciated stock to a qualified charitable organization, as opposed to a straight cash donation from stock sale proceeds, is another option that could help both an individual and the organization, providing more "bang for your charitable buck." For example, if one has $100,000 in stock including a capital gain of $40,000, it makes more financial sense to give the stock directly to the organization than sell it and donate the proceeds.

But time is growing short; with the expiration of current estate tax laws at the end of 2012 looming, you may face some significant changes in the areas of income, capital gains, and estate taxes. To learn more about supporting EAA today, contact EAA Development at 800-236-1025 or e-mail development@eaa.org. For more information, visit the Planned Giving website.

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