Skip to main content

Guide to Assisting Your Genealogy Passion & Reducing Taxes

(by Walter R. Knepper CPA)

1040 tax form

Making the decision to support charitable organizations can be complex. You must consider your overall wealth management strategy and seek assistance from your CPA or financial planner. You also need to consider your overall current income goals and how you’d like to see your contribution benefit the organization.

Giving back to IRS qualified charitable organizations, such as FEEFHS, is a rewarding experience. I’ve chosen to financially support our Organization because its provided me a solid educational foundation for my genealogy endeavors.  I encourage you to also consider making an investment in this well respected & recognized leader in our specialized Eastern European focus.

Throughout my career helping families plan for their financial future, my approach has always been to understand a family’s long-term goals and risk-tolerance levels to guide decision-making. You have to take these into account when determining the best investment strategy for your situation. When making a charitable donation to FEEFHS, you have several options available:

1.            Cash Donations

Donations to FEEFHS are fully deductible at a high level of 50 percent of adjusted income for individuals. The simplest method is to give a cash donation to FEEFHS and claim it on your 2017 tax return. Your donation will be properly substantiated by a canceled check or credit card and acknowledgement by FEEFHS.

2.            Stock Donations

Securities that you have held for 12 months or longer are long-term property, which may provide an optimum opportunity for disposing of that security and not paying tax on the appreciation. Capital gains taxes at the individual level are bypassed and permit for a substantial advantage in your tax planning and charitable giving opportunities subject to a limitation of 30 percent of your adjusted gross income.

3.            Charitable Remainder Trust (CRT)

This vehicle permits you to benefit annually from some of your assets with an income payment to you and your spouse during your lifetimes and then the assets pass to FEEFHS. Depending on whether you choose your life or the life of your spouse, you will receive a tax deduction for the present value of what will go to FEEFHS.

4.            Charitable Lead Trusts (CLT)

This type of trust permits you to benefit FEEFHS during your lifetime by paying a level of income to the organization. At your death, the proceeds of the trust are distributed to your named beneficiaries. If properly set up, it will remove these properties from your estate and is an effective tool for estate planning.

5.            Advanced Strategies

If you are selling your business and have charitable intent, you might utilize a charitable remainder unit trust (CRUT), which will generate cash that can be reinvested elsewhere. A CRUT will permit you to receive a stream of income and avoid capital gains tax. Interest rates vary with permissible allowed levels, but must be a minimum of 5 percent to the donor and a very large charitable donation will be allowed for this type of structure.

6.            Estate Bequests

1040 tax form amount owed

Depending upon your current income needs, you might wish to assist FEEFHS after your passing. As the estate tax exemption for each spouse currently exceeds $5.49 million, you might use assets, such as an IRA or other qualified plans, to effectively fund your charitable giving.

Using some of the above strategies, an individual in the top tax bracket might save $4,500-$5,000 annually considering federal and state taxes if a $10,000 contribution were annually made. This is in addition to substantial estate tax savings if the individual’s estate is more than $5.49 million. For a single person or married couple making approximately a $10,000 contribution would produce a $3,000-$4,000 annual tax savings.

Another intangible benefit of including FEEFHS in your estate planning is that we can secure your Family Tree and its related documents and materials and display them periodically at our annual seminars with your current financial support with acknowledgement to your efforts if that is your desire.

Your charitable planning must be integrated into your overall wealth management program and will depend upon your objectives. If you are interested in investing in the organization that helped make your genealogy pursuit enriching and rewarding, please contact Walt Knepper, Treasurer of FEEFHS, who can assist with your charitable giving plan at 727-398-6341.