GIFTS TO NOMA include:
- Gifts of Cash
- Gifts of Securities
- Tax-Free Gift from Your IRA
- Gifts of Life Insurance
- Gifts of Real Estate
- Gifts of Art
For more information, contact Monique Tourres, Development and Operations Manager at 504.658.4127 or firstname.lastname@example.org
Cash donations are one of the easiest ways to make a charitable contribution. Gifts of cash are eligible for an income tax deduction of up to 50% of your adjusted gross income. Any cash donation above the 50% of adjusted gross income limitation can be deducted on your income tax return up to five years after the gift.
Gifts of publicly traded stocks or investments that have grown in value and that you have owned longer that one year are treated almost like gifts of cash. Gifts of stock are eligible for an income tax deduction based on the fair market value of the stock on the date of the gift. When you give stocks to NOMA, you avoid all capital gains taxes that would be incurred if you sold the stock. The charitable deduction for gifts of stock is limited to 30% of your adjusted gross income; however, any excess deduction can be applied to your income tax return up to five years after the gift.
Stocks or investments that have decreased in value can also make a wise gift. By selling a stock that has decreased in value, you can realize the loss and take the allowable tax deduction. By donating the proceeds from the sale of the stock, you can also realize a charitable deduction.
Congress has extended the provision in the Pension Protection Act of 2006 enabling you to make outright gifts to charitable organizations from your IRA’s. In 2008 and 2009, individuals 70-1/2 or older were able to transfer up to $100,000 each year from traditional and Roth IRA’s as gifts to charity. IRA transfers under this provision count toward minimum annual distributions and are not subject to income tax.
What Are Some of the Benefits?
Donations from an IRA are excluded from the 50% of adjusted gross income limitation allowing those who have reached the 50% threshold to give more.
Several federal tax deductions (e.g. dependent and personal exemption deductions and deductions for medical expenses and non-business casualty losses) become smaller as a your income increases. By making charitable donations directly from an IRA, rather than taking required distributions that qualify as income, you can keep your annual income down and qualify for other tax deductions.
Be careful, though; the transfer must be made directly from your IRA to NOMA and not through you as an intermediary.
Life insurance is an excellent way to support NOMA. Gifts of life insurance can allow you to give even more than you ever thought possible.
You can name NOMA as the beneficiary of a life insurance policy and, upon your death, the proceeds of the policy would pass to NOMA. In this case, you retain ownership of the policy. While you do not receive an immediate income tax deduction, your estate will receive a charitable deduction.
If you have a fully paid-up or current life insurance policy that no longer serves your estate planning goals, you may irrevocably transfer ownership of the policy to NOMA. As a result of transferring the policy to NOMA, you will be entitled to an immediate income tax deduction. If you continue to pay the premiums on life insurance donated to NOMA, you will receive an income tax deduction for the year in which the premiums are paid.
If you have owned your home or other real estate for a long period of time, it is likely significantly increased in value. By gifting the property to NOMA, you are eligible for an income tax deduction of the fair market value of the property. Gifting the property to NOMA allows you to avoid all capital gains tax you would incur if you sold the property while also allowing you to remove the property from your taxable estate.
You can also transfer property to NOMA and keep the right to live in and use the property for your lifetime. You will be entitled to an income tax deduction based on your life expectancy and the value of the property.
Most gifts of art qualify for an income tax deduction based on their fair market value on the date of the gift. In order to qualify, you must have owned the work of art for at least one year. The income tax deduction for gifts of art are subject to the 30% of adjusted gross income limitation. If there is any excess deduction remaining, the excess may be deducted on your tax return up to five years after the year of the gift.
If you leave a work of art to the museum upon your death, your executor may deduct the value of the artwork from your taxable estate.
Exceptions for Deductions of Art
For artists, or for those who own a work of art as a gift from an artist, the deduction is limited to the cost of the artist’s materials. If a work of art is received from an artist by bequest, one may deduct the fair market value of the work of art. Art dealers are limited to a deduction based on the art’s value as inventory.
Related Use Rule
The IRS scrutinizes gifts to ensure that they are used in a related manner, and the actual, not the intended, use will determine whether property is put to a related use. This means that the donated property must be of a type normally retained and exhibited by NOMA. If the donated property does not satisfy the related use rule, all of the appreciated value of the donated property object will be lost as a charitable deduction.
If all the gifts of art you give in one year have an aggregate value of more than $5,000, an independent qualified appraiser must place a value on the gifts.
If you give artwork that is valued at more than $20,000, you must have a separate qualified written appraisal of the donated property from an independent qualified appraiser, and the appraisal must be attached to Form 8283 when it is submitted to the IRS.
Gifts of fractional interests in artwork are also possible, though new rules govern them and require careful study for donors who are not yet ready to part with full ownership of their artwork.