Ideas for Last-Minute, Year-End Giving
Year-end tax planning can result in extra tax savings next April when your tax bill comes due. This newsletter highlights some of the ways you might be able to reduce your income taxes and provide important support for the Nebraska State Historical Society. Not all of the "ifs, ands, or buts" for year-end tax planning are covered in this newsletter, but the topics will get you thinking! Be sure to contact your tax advisor to see how these strategies might benefit you.
As you review your year-end tax planning, consider making good use of the income tax charitable deduction. Your 2002 year-end gift can significantly reduce your income taxes, while providing a meaningful difference in what we do. And the charitable gifts you make now could leave you much better off on April 15. The amount of the income tax savings will depend on your tax bracket.
For example: If you are in a 31 percent income tax bracket in 2002, and you itemize your deductions, a $1,000 gift to us by December 31 will save you $310 in 2002 taxes. The higher your tax bracket, the more money you save with a charitable gift.
Consider making more charitable gifts in those years when you have the most income and are in the top federal income tax brackets. If such is the case for 2002, you may wish to consider accelerating future charitable gifts into this year. Check with your tax advisor.
Because of the income tax charitable deduction, anyone who makes a gift by December 31 and itemizes can reduce the sting of income taxes for 2002.
We've included a few of the best year-end, tax-saving gift ideas that can reduce your tax liability while helping us to preserve and protect Nebraska's history. We would be pleased to provide you with further information. Also, we urge you to discuss your tax planning with your accountant or other professional advisor.
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Nebraska State Historical Society Foundation
215 Centennial Mall South #408
Lincoln, NE 68508
Gifts of Life Insurance: A Good Policy for Giving
A gift of life insurance can provide a significant year-end charitable deduction. You could purchase a new policyor donate a policy you currently own but no longer need. To receive a deduction, designate us as both the owner and beneficiary of the life insurance policy. Check with your insurance agent for the details.
For example: Mr. Jones owns a $100,000 life insurance policy with a current cash value of $34,582. By transferring the policy to us as the new owner and beneficiary, Mr. Jones is able to receive a current charitable deduction in the amount of $34,582. If Mr. Jones decides to continue to pay the premiums on the policy after the gift is made, these additional premium payments will be tax deductible each year.
Giving Reminders for 2002
Gifts made by December 31 are deductible in 2002 and can reduce taxes. Your gift must be postmarked by December 31 to qualify for a 2002 gift.
Giving long-term appreciated property or securities rather than cash can often provide greater tax savings.
Giving through wills, trusts, and other long-range financial planning instruments can be convenient, economical, and help reduce estate taxes.
Ask your professional advisor about the giving method that provides the most benefits to you.
Giving is, of course, much more than tax brackets and charitable deductions. Your charitable gifts make an important difference in what we are able to accomplish. With your help the Nebraska State Historical Society can provide greater access to the many fascinating stories of our state and the artifacts that tell those stories.
For more information on how to reduce your income taxes significantly next spring and help us safeguard and share our state's history, contact the NSHS Foundation, your tax advisor, or attorney.
Making Your Gift with Securities
If you have investments that have increased in value during the time you have owned them, you may wish to use them to fund all or a portion of your charitable gifts this year. The best stocks to donate are those that have increased greatly in value, particularly those generating a low yield. Those investments can offer a tax-efficient way to make a meaningful gift with little or no impact on your spendable income.
You can make your gift using stock you have owned for more than one year and receive a two-fold tax savings. Appreciated stock that has increased in value and is given as a charitable gift provides an income tax deduction to you for the full fair market value of the stock at the time of the gift. In addition, you will avoid paying any capital gains tax on the increased value of the stock.
You may be reluctant to use a particular well-performing security to fund your gift. If the security is one that you would like to continue to own, you could make a gift of the stock to the Nebraska State Historical Society Foundation and repurchase shares in the same corporation. This plan accomplishes several things: your gift of stock provides significant support to Nebraska history, you avoid capital gains taxes on the gift of the stock, you receive a tax deduction for the value of your stock gift, and when you purchase additional stock in the same corporation, you establish a new higher cost basis for your portfolio.
If you have stock losses, it is to your benefit to sell the stock yourself to realize the loss for tax purposes. You can then contribute the cash value to us and also receive a charitable gift deduction.
Your stockbroker or trust officer can help you select the most advantageous way to make a gift of stock and complete arrangement for the gift.
Gifts from your Retirement Accounts
If you are over the age of fifty-nine and one-half and have traditional retirement accounts, you may wish to consider using cash withdrawals to make your year-end charitable gifts.
When you make the withdrawal you must report the proceeds as income on your tax return. By using that same amount to make your year-end charitable gift to the Nebraska State Historical Society Foundation, you create a "wash" for tax purposes. Your gift creates a corresponding deduction in the same year. This allows you to withdraw funds from your retirement account without causing a tax consequence.
Making a gift in this way also assures that those funds will never be subject to income, gift, or estate taxes.
Your Charitable Gifts Can Help Minimize Your Estate Taxes
Estate tax reforms effective January 1, 2002, provided that many Americans may now give more to loved ones and charitable interests without regard to federal gift and/or estate taxes. For those who will be liable for estate taxes, there are still no limits on the amount deductible as charitable gifts from your estate. You may be pleasantly surprised by the number of opportunities to safeguard your future economic security, preserve assets for loved ones, and make preparations for thoughtful gifts that further charitable purposes you wish to support.
Giving through your will can be a convenient way to provide for loved ones while you make charitable gifts of a specific amount, a percentage of your estate, or all or part of what remains after others have been remembered.
Giving through life insurance can allow you to make a gift of proceeds that may no longer be needed to assure the economic security of a spouse or other loved ones. You simply name a charitable beneficiary to receive all or a portion of policy payments at death. Naming the charitable beneficiary removes the insurance proceeds from the estate resulting in estate tax benefits from such gifts.
Giving through living trusts is another option you may wish to consider. Charitable gifts can be a rewarding addition to such trusts.
Giving the remainder of retirement plans is gaining in popularity. You may wish to consider how you can use retirement funds to make charitable gifts in a tax-efficient way. Check for tax law provisions that may make gifts of retirement plan assets as part of your estate plans especially attractive.
Gifts that give back. You can make a gift today and retain income for life or period of time you choose for yourself and/or a loved one. Charitable remainder trusts and similar gift plans can be an attractive way to make a charitable gift while increasing income in times of relatively low investment returns.
Foundation Board of Directors
James W. Hewitt, Lincoln, President
Allison D. Petersen, Walton, Executive Vice President
Joanne F. Shephard, Valentine, Secretary
Robert D. Northrop, Lincoln, Treasurer
Jack D. Campbell, Lincoln
Thomas Creigh, Jr., Hastings
Martha A. Greer, Lincoln
Steven E. Guenzel, Lincoln
Diane N. "Diny" Landen, Omaha
Dr. Frederick C. Luebke, Lincoln
Lu Marcotte, Nebraska City
Dr. Martin A. Massengale, Lincoln
John D. Massey, Scottsbluff
George H. Moyer, Jr., Madison
James F. Nissen, Lincoln
Cynthia Olson, Lisco
Amy Scott-Willer, Omaha
John W. Webster, Omaha
S. N. "Bud" Wolbach, Grand Island
Dr. John Wunder, Lincoln
Dorothy G. Hevelone, Beatrice, Director Emeritus
Lawrence J. Sommer, Lincoln, NSHS Director, Ex-officio
Keith Blackledge, North Platte, NSHS President, Ex-officio
Jim McKee, Lincoln, NSHS Treasurer, Ex-officio
Jackie Spahn, Executive Director
Nebraska State Historical Society Foundation
215 Centennial Mall South, #408
Lincoln, NE 68508-1813
September/October 2002 Issue