Year End Tax Planning – Here We Go….

Year end holiday shopping is already happening – what about year end tax planning?  And, what are the opportunities (and pitfalls) for fundraisers?

Click here for a link to a recent Forbes piece.  In short, they are recommending selling capital gains property while the 15% bracket still exists.  Not a great message for charitable giving which usually says “avoid capital gains by giving your appreciated property.”  So, we might see advisors not steering clients toward charitable gifts to avoid capital gains but rather cashing in on gains at current low tax rates.

The bonus will be in 2013 when capital gains will almost certainly jump back to 20% (and 23.8% for higher earners from the Obamacare tax on investment income).  Capital gains avoidance will hopefully be more relevant for major gifts and planned giving in 2013 and beyond.

I love this one from the Washington Post:  EARN MORE, PAY MORE (click here to see it) – just reminding investors who have been enjoying paying only 15% on dividends – they may see their taxes on those same dividends almost triple!  Max rate on that same dividend will be 43.4%!  Hey, trade in that dividend stock for a CGA!  Run the numbers and it is impressive what a CGA offers when dividends are so highly taxed.

Actually, the article mentions that companies may speed up dividends to be distributed before year end (and let their shareholders get one last taste of 15% taxes). Maybe your donors will have some windfalls to play with (i.e. give to your charity)?

Lastly, a client just asked where we are standing on the IRA rollover (included in the tax extenders).  Click here on the latest on this issue.  In short, no tax extender until fiscal cliff talks are finished.  Who thinks the fiscal cliff is getting resolved before the end of the year?   This means that fundraisers have to wait a few more weeks before giving up hope (or not) on year-end IRA gifts.

 

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