Smart Giving: Time Your Gift to Best Tax Advantage

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What are some smart things to do as I plan my charitable giving?

Smart Giving: Time Your Gift to Best Tax Advantage

For many people, income can vary from year to year. Tax rates fall and rise in step with income fluctuations. Luckily, income tax savings from donations rise and fall as well. For example, imagine that you know your income will be substantially greater in 2006 than it is in 2005. If your tax rate is 28% in 2005, you expect a tax rate of 39.6% in 2006, your relative tax deduction on a $10,000 would be $2,800 for a gift made on or before December 31, 2005 and $3,960 for a gift made on or after January 1, 2006.

*If you are in the fortunate position to be making large donations and your income varies from year to year, plan to make large donations during the higher income years.

   

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