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Q&A: "I'm 86, Married, and Work Part-Time. Together my wife and I Make $100,000 a Year. If I were to make a $60,000 Donation to a Charity, How Much Could I Save on Taxes?"

Charitable Tax

Question: 

I'm 86, married, and work part time. Together my wife and I make $100,000 a year. If I were to make a $60,000 donation to a charity, how much could I save on taxes?

Larry's answer:

What you actually save on taxes will depend on the type of charitable gift (cash or appreciated property), how much you deduct in the year the gift is made, and your other tax deductions and credits. 

Generally speaking, a gift of cash to a qualified charity is tax deductible (federally) in the year made up to 50% of your adjusted gross income (AGI). AGI is the amount at the bottom of the first page of your Form 1040 return. On the other hand, a gift of appreciated property (real estate, investments, etc) is deductible up to 30% of your AGI. The good thing is any amount you can't deduct for the year you make the gift can be carried forward and claimed in future years (up to five years).

As an example, let's assume your joint AGI is $100,000. If you make a $60,000 cash donation in 2014, then you could deduct $50,000 (50% of your $100,000 income) of that this year and carry forward the remaining $10,000 to be claimed in 2015 or a future year. If you make a $60,000 donation of appreciated property, then you could deduct $30,000 (30% of your $100,000 income) this year and carry forward the remaining $30,000. 

Depending on your current deductions, you and your wife are probably in the lower range of the 25% federal tax bracket currently. A large charitable gift like this would move you folks down into the 15% tax bracket. In fact, you could probably structure the deduction of your gift over multiple years in a way that you claim only enough of it each year to get you down into the 15% bracket.

Hope that helps. All the best.

Originally posted on NerdWallet's Ask an Advisor on June 18, 2014.