Charitable Giving

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Year-End Tax Saving Strategies

Lupe Camargo, financial plannerNow is a perfect time to check for any remaining opportunities to help minimize your tax bill before 2017 comes to a close. There are many year-end tax saving strategies for you to consider.

At Perspective Financial Services, we take a proactive approach to minimize our clients’ tax bills through a variety of investment strategies. Selling a security in a taxable account at a loss and replacing it with another security of the same asset class can help offset some of your capital gains tax; this is referred to as tax loss harvesting. We also research mutual funds that may generate a capital gains distribution before making end of year purchases; this helps avoid unnecessary capital gains taxes on new investments.

There are additional things you can do, with the help of your financial planner. Here is a checklist of things to think about.

When possible be proactive about the timing of your income. This can make a significant impact on your tax bill.

  • Defer a bonus or a sale of appreciated property to the following year when it becomes advantageous to avoid the income this year.
  • Pay expenses this year, such as fourth quarter state income taxes or medical expenses. This helps especially when next year’s income will be less than this year.
  • Increase your federal income tax withholding to soften the blow of a significant tax bill.

Take advantage of the vehicles that not only help you plan for the future, but give the added bonus of reducing your income taxes.

  • Max out your IRA contributions, and take advantage of the catch-up if you are over 50 years old.
  • If you are over 70 1/2 years old, or you have an inherited IRA, do not forget to take your required minimum distribution. The penalties are very steep if you do not.

If you are planning to gift money to family or charities, do so before the end of the year.

  • Give $14,000 per individual annually in federal tax-free gifts.
  • Make planned charitable contributions and take advantage of the charitable rollover provision if you are over 70 1/2 years of age.
By |December 4th, 2017|Advisors, Charitable Giving, Taxes|

Arizona Tax Credits Help the Community

Arizona tax credits help the community through programs like PetSmart Charities emergencyNovember 29 is Giving Tuesday this year, Arizonans who pay state income tax have a unique and easy opportunity to give by directing where some of those dollars are spent. Arizona tax credits help the community. The state offers a number of dollar-for-dollar credits you can specify on your income-tax return to benefit schools, registered charitable organizations and military families.

  • Public schools: You can donate up to $400 married ($200 for singles) to any public or charter school in Arizona for after-school activities. Effective in 2016, donations can be made up to April 15 of the next year (Use Form 322).
  • Private school tuition organizations: You can give up to $1,090 married ($545 single) to a tuition organization that awards scholarships for children in Arizona private schools (Form 323). If you wish to donate more than the Form 323 maximum, you can give up to another $1,083 married ($542 single), but this must be claimed on Form 348. Donations can be made up to April 15 of the next year. Click here for more information.
  • Qualified Charitable Organization (formerly Working Poor): You can donate up to $800 married ($400 single) to any Arizona-registered charity that helps the poor (Form 321, organization must be approved by the Department of Revenue). You must also itemize your deductions on your Arizona form to claim this credit. Effective in 2016, donations can be made up to April 15 of the next year. Click here for more information.
  • Military family relief: You can contribute $400 married ($200 single) to benefit Arizona service members and their families. The assistance goes to those who are deployed or to the families of those injured or killed. The credit is capped at $1 million annually so it’s important to get this money in as early as possible. Any money received after $1 million is reached (usually sometime in December) is returned (Use Form 340). Click here for more information. 
By |November 29th, 2016|Charitable Giving, Taxes|

Seeing the Big Picture and Defining Success

I’ve always believed successful financial management was more than crunching numbers, researching the analytics, and applying market principles and applicable tax laws. While there are certainly prerequisites to financial success, the real key to successfully managing your finances is knowing and managing yourself.

Poor financial decisions often the result of not being able to see the big picture, looking at the short field rather than the long horizon, of not having proper perspective. This is certainly true with our personal lives, as well.

Last month, I gained a new perspective on my world when I served with a medical mission team in rural Guatemala. Excited for a new adventure, I agreed to participate without knowing much detail (and without having any medical training or speaking any Spanish). At a pre-trip meeting a few weeks out, we were told not to bring anything that would be upsetting to lose, to pack light, dress down, don’t walk alone or at night, and “try not to look like money.”

Upon arriving, a four-hour drive immersed us into a new reality — heavy air pollution, dilapidated housing, chaotic traffic, loose livestock and an endless stream of people walking on the side of the road all carrying various supplies on their backs, heads and arms.

We set up temporary medical clinics each day in small villages. The typical venue was a rectangular hall in which we strung up rope and tarps to make a couple private exam rooms. We had two doctors, some local translators (Spanish and K’iche’, one of the Mayan languages), and a suitcase pharmacy stocked with basic needs. Guatemalans trust American doctors far more than their own, and for the most part this was their only doctor visit for the year.

One of our team members, a Guatemalan native who immigrated to the United States in the 1970s, helped collect 14 suitcases full of clothing, shoes, hats and toys to distribute. Additionally, we had our 16-year-old “eye doctor” who had collected glasses over the last year and was prepared to test vision and provide a best-effort fit. Both were very popular. Many of the people in these villages do not have running water and electricity, much less these basic daily necessities.

Traditional (Mayan) garb was worn by most women and girls. Boys wore ragged jeans and t-shirts. Most shoes were quite worn, typically with holes. Despite my best efforts, wearing plain gray t-shirts and brown hiking shoes, I still looked like money.

Lots of children hang around unsupervised during and after school. My job on the team soon became keeping the kids out of the way and entertained. Many of them got to throw a Frisbee and (American) football for the first time. We also joined them for soccer, and clearly gave up any competitive advantage.

Our success in life, and how we define it, can often be found by stepping back once in a while and taking in the big picture.

By |May 27th, 2014|Advisors, Charitable Giving, Company News|

Generosity Requires Due Diligence

People often have well-established and respected charities that are close to their hearts. However, when considering donating to less-familiar charities, donors should be cautious.

CNN recently reported that many charities actually do very little for the causes they purport to assist and that “the 50 worst charities give less than 4 percent of donations raised to direct cash aid.” Vast sums of donated funds go to pay for-profit fund-raising companies and lavish executive salaries and perks, before any cash goes to aid the needy cause. In other words, they basically “raise money to pay themselves.”

Organizations such as Charity Watch and Charity Navigator provide rankings of the best- and worst-rated charities. Charity Navigator has also issued its “Top 10 Practices of Savvy Donors,” which includes “Hang up the phone on for-profit fund raisers.” Another top practice is not falling for the “sound-alike” charities. CNN called the Kids Wish Network “the worst charity in America,” while the similar-sounding Make a Wish Foundation is highly-rated by Charity Navigator. So-called “instant charities” that pop up after a world disaster such as an earthquake should generally be avoided, as well.

America is truly a “nation of givers,” of both cash and time, according to the American Enterprise Institute. A study by social scientist Arthur C. Brooks shows that Americans give well over $300 billion to charity, not including the value of our volunteered time. During the past 50 years, while GDP has risen about 150 percent, charity has risen about 190 percent. So, while Americans have grown richer, charitable giving has grown even more.

Our advice to the generous client: In addition to getting solid financial, tax and legal advice with one’s charitable plan, don’t forget the due diligence on the charity itself.

By |August 27th, 2013|Charitable Giving, Estate Planning|