The easiest, most common way for you to support Freed-Hardeman University is with cash gifts made by credit card or check.
- Main Benefits - When you make a cash gift by currency, credit card or check to FHU today, we both benefit. Your generosity enables us to meet our most urgent needs and carry out our mission on a daily basis. Your benefits include:
- The ability to choose how your gift is used.
- The opportunity to see the results of your generosity.
- An immediate charitable deduction on your federal income taxes, when you itemize.
- If You Don't Usually Itemize... If you have few itemized deductions, consider alternating between years in which you take the standard deduction and make few charitable gifts and years in which you give double your usual annual philanthropic support and shift to itemizing.
- How to Document Your Gift - For gifts by check of less than $250, a copy of the check is sufficient documentation. For a check of $250 or more, you should obtain a receipt from the charity.
- For other contributions, be sure to get a written acknowledgement of your gift from Freed-Hardeman University. It must include:
- The amount of cash contributed.
- Whether you received any goods or services in exchange for the gift.
- A description and good faith estimate of the value of any goods or services you received in return.
- How to Figure Your Maximum Charitable Deductions - Generally, the maximum deduction for cash gifts is 50 percent of your adjusted gross income. If filing jointly, use your aggregate adjusted gross income. Any excess deduction may be carried over for up to five additional years.
- Example: Figuring Your Benefits - Richard plans to make a $1,000 cash gift to a qualified charitable organization. Richard's annual adjusted gross income is $45,000.
|Gift Amount ...................................................................................................... ||$1,000 |
|Taxes Saved |
Richard's combined state and federal marginal income ........................................
tax rate (28%) x his gift amount ($1,000)
|Net Cost of Gift (gift amount - taxes saved)......................................................... ||$720 |
Many items of tangible personal property make suitable charitable gifts. The available tax deduction depends on whether or not the organization that receives the property will use it in a way that is related to its tax-exempt purpose.
Related use property is deductible at the full fair market value. Example: a piece of artwork is donated to an art museum (other than for sale by the museum).
The deduction for non-related use personal property is limited to the lesser of fair market value or the donor's tax basis in the property.
Examples are books, collectibles, artwork, equipment, automobiles, inventory, patents and royalties.
If you would like to make a gift-in-kind please contact our office of Estate and Gift Planning at 731-989-6020 to learn more.
A stock portfolio is often among the most valuable assets you own—and one that can carry substantial capital gain, or appreciation in value. With careful planning, you can reduce or even eliminate federal capital gains tax while supporting our work. Read on to see why donating stock can offer even more tax benefits than writing a check.
- Did you know? Stocks are considered to be appreciated for tax purposes if they're worth more now than when you purchased them.
- How It Works - As stock prices increase, so do the taxes you owe on the long-term capital gain, which are generally charged at a rate of 15 percent (0 percent if you are in the 10 and 15 percent tax brackets) through 2012. But when you donate publicly traded stock you've owned for more than one year to a qualified charitable organization such as FHU, you enjoy two major tax benefits:
- You will be exempt from paying capital gains taxes on any increase in value—taxes you would pay if you had otherwise sold the securities.
- You are entitled to a federal income tax deduction based on the current fair market value of the securities, regardless of their original cost.
- The income tax deduction for long-term capital gain property is limited to 30 percent of your adjusted gross income in the year you make the gift, but your excess deduction is deductible for up to five additional years.
- Example - Lucy wants to make a charitable gift of $10,000. She can make her gift with either cash or stock. She has a marginal federal income tax rate of 28 percent and is not subject to state or local income taxes. The stock's value is $10,000, with a cost basis of $4,000.
|CASH GIFT VS. STOCK GIFT || || |
|Type of Gift || Cash || Stock |
|Value of Gift || $10,000 || $10,000 |
|Long-term capital gain if sold || N/A || $6,000 |
|Long-term capital gains tax eliminated |
$6,000 x 15% rate
| N/A || $900 |
|Income tax savings |
$10,000 x 28% rate
| $2,800 || $2,800 |
|Total tax savings |
capital gains tax eliminated + income tax savings
| $2,800 || $3,700 |
|Net cost of gift |
value of gift - total tax savings
| $7,200 || $6,300 |
In this example, using the stock instead of writing a check saves an added $900. A higher federal tax bracket and any state or local income taxes would further improve Lucy's results.
- How It Works - Savings bonds are normally taxed when they're cashed in, reissued to another person or reach final maturity. Fortunately, you can reduce, or even eliminate, income taxes when you choose to leave your bonds to Freed-Hardeman University. Although the bonds themselves can't be directly donated to a charitable organization during your lifetime, there are three smart strategies that allow you to use your bonds to support our mission.
- Did you know? Even though U.S. savings bonds offer steady return and absolute security, redeeming them can cause tax headaches. But you can save on taxes by using your bonds to support our cause.
- Three Charitable Options
- Redeem your savings bonds and use the cash to make a gift to us. The redemption will trigger a tax liability to you on the interest income, but if you itemize, you will receive the benefit of a charitable tax deduction to help offset the additional taxable income.
- Leave the bonds to us through your will. Because we are a tax-exempt organization, we will receive the full value of the bonds, which could have otherwise been reduced by up to 35 percent for income taxes. For a small percentage of people, federal estate taxes might also reduce the amount available.
- Leave the bonds upon your death to a charitable remainder trust. They will first benefit your selected loved ones with lifetime payments, and then the balance will support our mission.
- Example - Steve leaves $10,000 of U.S. savings bonds to his daughter, Becky, upon his death. Becky is in the 35 percent income tax bracket, so she receives only $6,500 ($10,000 - $3,500) after she pays the income tax on the bonds. If Steve were to leave the bonds to us instead, we would receive the entire $10,000 because we are a tax-exempt organization.
Life insurance is an asset you may not think of donating to Freed-Hardeman University until you hear how powerful, practical and simple it can be.
- How It Works - When you own a life insurance policy with accumulated cash value, you're essentially sitting on a pile of money. When the original purpose for the protection no longer applies—such as to educate children now grown or to provide financial security for a spouse now deceased—your life insurance can be redirected to help support a worthwhile cause. One option is simply to name Freed-Hardeman University as the primary beneficiary. (Naming us as beneficiary while you retain ownership of the policy, however, does not qualify you for an income tax deduction.) Or, you can name us as the beneficiary and also assign us ownership of the policy as a current charitable gift. Doing so provides you tax benefits as outlined below.
- How You Benefit - When you assign us ownership of a life insurance policy and also name us as the beneficiary, the following good things happen:
- You receive an income tax charitable deduction, available under most circumstances.
- You realize tax savings from use of the deduction, and these savings can be invested for future income.
- You reduce your future estate tax liability.
- Did you know? If you are concerned that supporting our work will reduce your family's inheritance, a new life insurance policy equal to your charitable gift can replace the value of your loved ones' inheritance.
- Donating a New Policy - Perhaps you don't own an existing policy but still realize how beneficial giving life insurance can be. If so, you can—in most states—purchase a new insurance policy and name a qualified charity like ours as the beneficiary and owner of the policy. Rather than paying premiums to the insurance company, you make tax-deductible cash gifts to cover the annual premiums. Even greater leverage is possible when two donors, usually spouses, purchase a two-life second-to-die policy. With two lifetimes before the payment of death benefits, a future gift to us will cost you even less.
RETIREMENT PLAN ASSETS
Want to get the most value from your nest egg, protect your heirs from heavy taxes and make your mark at our organization? Consider leaving a portion of your retirement plan assets to us.
- How It Works - If you die with retirement plan assets in your estate, those assets are subject to income taxes. This can reduce the amount that normally would be passed to heirs by up to 35 percent. In contrast, as a nonprofit organization, we are tax-exempt and eligible to receive the full amount and bypass any federal taxes. Income taxes can be avoided or reduced through a carefully planned charitable gift. Consider these gift options:
- Designate Freed-Hardeman University as the primary beneficiary for a percentage (1 to 100 percent) of your retirement plan assets.
- Designate a specific amount to be paid to us before the remainder is divided among family beneficiaries.
- Make us the contingent beneficiary to receive the balance only if your loved one, as primary beneficiary, doesn't survive you.
- Did you know? If your children are the beneficiaries of your IRAs and other retirement plan assets, federal income taxes may erode up to 35 percent of the amount they receive.
- To implement your wishes, simply advise your plan administrator of your decision and sign whatever forms are required.
- You name Freed-Hardeman University as beneficiary of all or part of your retirement plan assets.
- Freed-Hardeman University receives the balance of the plan at your death.
- How You Benefit - Leaving retirement plan assets to Freed-Hardeman University shields your heirs from taxes on the retirement assets and frees you to give them other assets that are not as heavily taxed.
- For Example - Betty plans to leave $250,000 to her niece, Karen, and $250,000 to Freed-Hardeman University. Among her assets, Betty owns a $250,000 IRA. If she leaves the IRA to Karen, it will be subject to income taxes at Karen's marginal income tax rate (35 percent). To avoid her niece having to pay these taxes, Betty names us the beneficiary of her IRA and leaves less tax-burdened assets to Karen. Because our organization is tax-exempt, income taxes are eliminated.