Remember to Give Back This Holiday Season!
There lots of ways that you can give to your favorite charity this Holiday Season! This blog discusses several different ways to give to charity for year-end and discusses different ways to give to charities in your estate plan.
Five State Tax Credits for Arizona Taxpayers
First, before I discuss them, I want to mention the 5 state tax credits that Arizona taxpayers have to support their favorite schools and charities:
- Public School Tax Credit – Maximum Credit: $400 for married couples filing jointly; $200 for all other filers.
- Qualifying Charitable Organizations – Maximum Credit: $987 for married couples filing jointly; $495 for all other filers.
- Qualifying Foster Care Charitable Organizations – Maximum Credit: $1,234 for married couples filing jointly; $618 for all other filers.
- Certified School Tuition Organizations – Two separate tax credits are available for contributions to Certified School Tuition Organizations (“STO’s”) for scholarships for students in Arizona private schools.
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- “Original” Individual Income Tax Credit
- “Switcher” Individual Income Tax Credit
Maximum Credit: $3,062 for married couples filing jointly; $1,535 for all other filers.
Here is a link to find out more information about these Arizona state tax credits – https://azdor.gov/tax-credits.
Five Ways to Give to Charity This Year
Second, here are 5 ways that you can give this year to charity outside of the state tax credit gifts:
- Outright. You can always give a check or make an online donation to your favorite church or charity.
- Gift of Appreciated Stock. In addition, if you have highly appreciated stock, consider giving the stock to your favorite charity, as the charity will not have to incur any capital gains tax when the stock is sold.
- Charitable Annuities. Next, depending on your age, consider a charitable annuity. This allows you to make a donation this year, get an income tax deduction this year, and receive an income stream over your lifetime.
- Make a Qualified Charitable Distribution from Your IRA. If you are at least 70 ½, then you can make a Qualified Charitable Distribution of up to $108,000 per individual in 2025 out of your IRA directly to the qualified charity of your choice without paying any income taxes. However, we recommend that you consult with your tax advisor beforehand.
- Set Up a Donor-Advised Fund. Not sure where you want to donate, but want to get the income tax deduction in 2025? Consider opening a donor-advised fund in your name to receive the donation this year and figure which charity or charities to choose next year. Check with your local community foundation or with Charles Schwab or Fidelity for details.
Four Ways to Leave a Charitable Legacy in Your Estate
Finally, you can also include a charitable gift in your estate plan. Here are 4 ways for you to leave a charitable legacy in your estate plan:
- Make an Outright Gift in Your Will or Trust. When you pass away, give a certain dollar amount or percentage of your estate to your favorite charity.
- Establish an Endowment for Your Favorite Charity. An endowment is a restricted fund established to invest the principal and allow the income only to be distributed to your favorite charity each year. Once established, this endowed gift will keep giving every year to that charity forever.
- Name Your Favorite Charity as the Beneficiary of Your IRA or Life Insurance Policy. Instead of naming your children, grandchildren, or another beneficiary, consider naming your favorite charity instead. For IRA’s, there is an added benefit, because the charity does not pay any income taxes on the distributions.
- Name Your Donor-Advised Fund as the Beneficiary of a Portion of Your Estate. Not sure which charity to choose after you are gone? Consider naming your donor-advised fund as the charitable beneficiary. After you are gone, the successor advisors of your donor-advised fund can make the decision based on your wishes.
If I can assist you, your family, or your friends with any estate planning, probate, trust, guardianship/conservatorship, or business planning issues, please feel free to call me or e-mail me. As always, I look forward to continuing to serve my clients by giving each one of them “an EVEN BETTER legal experience”.
Happy New Year!
All the best,
John