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With the holiday season upon us and the end of the year approaching, we pause to give thanks for our blessings and the people in our lives. It is also a time when charitable giving often comes to mind. The tax benefits associated with charitable giving could potentially enhance your ability to give and should be considered as part of your year-end tax planning.
Tax deduction for charitable gifts
If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. This may also help potentially increase your gift.
Example(s)
: Assume you want to make a charitable gift of $1,000. One way to potentially enhance the gift is to increase it by the amount of any income taxes you save with the charitable deduction for the gift. At a 24% tax rate, you might be able to give $1,316 to charity [$1,000 ÷ (1 - 24%) = $1,316; $1,316 x 24% = $316 taxes saved]. On the other hand, at a 32% tax rate, you might be able to give $1,471 to charity [$1,000 ÷ (1 - 32%) = $1,471; $1,471 x 32% = $471 taxes saved].
However, keep in mind that the amount of your deduction may be limited to certain percentages of your adjusted gross income (AGI) from your company. For example, your deduction for gifts of cash to public charities is generally limited to 60% of your AGI for the year, and other gifts to charity are typically limited to 30% or 20% of your AGI. Charitable deductions that exceed the AGI limits may generally be carried over and deducted over the next five years, subject to the income percentage limits in those years.
For 2021 charitable gifts, the normal rules have been enhanced: The limit is increased to 100% of AGI for direct cash gifts to public charities. And even if you don't itemize deductions, you can receive a $300 charitable deduction ($600 for joint returns) for direct cash gifts to public charities (in addition to the standard deduction).
Make sure to retain proper substantiation of your charitable contribution. In order to claim a charitable deduction for any contribution of cash, a check, or other monetary gift, you must maintain a record of such contributions through a bank record (such as a cancelled check, a bank or credit union statement, or a credit-card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a charitable deduction for any contribution of $250 or more, you must substantiate the contribution with a contemporaneous written acknowledgment of the contribution from the charity. If you make any noncash contributions, there are additional requirements.
Year-end tax planning
When making charitable gifts at the end of a year, you should consider them as part of your year-end tax planning. Typically, you have a certain amount of control over the timing of income and expenses. You generally want to time your recognition of income so that it will be taxed at the lowest rate possible, and time your deductible expenses so they can be claimed in years when you are in a higher tax bracket.
For example, if you expect to be in a higher tax bracket next year, it may make sense to wait and make the charitable contribution in January so that you can take the deduction next year when the deduction results in a greater tax benefit. Or you might shift the charitable contribution, along with other deductions, into a year when your itemized deductions would be greater than the standard deduction amount. And if the income percentage limits above are a concern in one year, you might consider ways to shift income into that year or shift deductions out of that year, so that a larger charitable deduction is available for that year. A tax professional can help you evaluate your individual tax situation.
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A word of caution
Be sure to deal with recognized charities and be wary of charities with similar-sounding names. It is common for scam artists to impersonate charities using bogus websites, email, phone calls, social media, and in-person solicitations. Check out the charity on the IRS website, irs.gov, using the Tax Exempt Organization Search tool. And don't send cash; contribute by check or credit card.
How does 21st Century Fox America Inc. determine the funding status of its pension plan, and what key metrics are utilized in evaluating its financial health? Employees may want to understand the significance of the Funding Target Attainment Percentage and how it influences their retirement benefits, especially as it pertains to both the general and specific circumstances affecting funding levels.
Funding Status and Metrics: 21st Century Fox America Inc. determines the funding status of its pension plan by calculating the Funding Target Attainment Percentage (FTAP), which divides the plan’s net assets by its liabilities. For the 2022 plan year, the FTAP was 125.79%. This metric is crucial because it indicates how well the plan is funded. A high FTAP suggests that the plan is well-funded and capable of meeting its obligations, which directly influences employees' retirement security(21st Century Fox Americ…).
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Investment Strategy Considerations: The company follows specific investment policies that establish guidelines for asset allocation within the pension plan. These policies ensure that assets are allocated among major categories like equities, fixed income, and cash. The fiduciaries of the plan determine the target ranges for each category, aiming for stable returns and long-term viability(21st Century Fox Americ…).
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Rights and Pension Termination: Should the pension plan terminate, federal law requires 21st Century Fox America Inc. to follow certain procedures. If fully funded, the plan would undergo a standard termination, where an insurance company provides annuities, or a lump sum may be offered. In underfunded cases, a distress termination could occur, where the Pension Benefit Guaranty Corporation (PBGC) takes over(21st Century Fox Americ…).
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Impact of Federal Regulations: Recent changes in federal regulations, including the American Rescue Plan Act of 2021, adjusted the methodologies for calculating pension liabilities. Plans now incorporate a 25-year interest rate average, which typically results in higher interest rates and lower liabilities, affecting the funding status and employer contributions(21st Century Fox Americ…).
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Role of PBGC: The PBGC provides a guarantee for vested pension benefits in the event of plan termination. The guarantee is subject to legal limits, which vary depending on the participant’s age and the plan’s termination date. For 2023, the maximum annual benefit for a 65-year-old retiree was $81,000(21st Century Fox Americ…).
What steps can employees take to access information related to their pension plan from 21st Century Fox America Inc., and how can they ensure they receive timely updates regarding their benefits? Details about the channels available for inquiries and the importance of keeping informed about funding levels and benefits are crucial.
Accessing Pension Information: Employees can access information about their pension plan through the Disney Benefits Center by calling (800) 354-3970. Staying informed about the plan’s funding levels and benefits is essential, and employees are encouraged to review the annual funding notice for updates(21st Century Fox Americ…).
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Risk Management in Investments: To manage investment risks, 21st Century Fox America Inc. adheres to a diversified asset allocation strategy. This approach helps mitigate market volatility and ensures the long-term sustainability of pension benefits despite changing economic conditions(21st Century Fox Americ…).
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Service and Salary Impact on Benefits: The pension plan is structured to account for employees' years of service and salary history in calculating their retirement benefits. These factors directly affect the benefit amount, and the plan ensures that accurate records are maintained to reflect this information(21st Century Fox Americ…).
What unique benefits does 21st Century Fox America Inc. offer that may enhance its pension plan, and how can employees maximize their advantages while planning for retirement? Understanding available supplemental benefits can empower employees in their retirement planning journeys.
Enhancing Pension Benefits: Employees of 21st Century Fox America Inc. may benefit from supplemental retirement benefits, including early retirement options or disability benefits. Understanding and maximizing these options can significantly impact long-term retirement planning(21st Century Fox Americ…).
How can employees of 21st Century Fox America Inc. get in touch with the Disney Benefits Center to inquire further about their employee benefits or to clarify any aspects of the pension plan? Having clear contact information and the process for accessing support can greatly assist employees in navigating their retirement preparation.
Contacting the Disney Benefits Center: Employees can reach out to the Disney Benefits Center at (800) 354-3970 for any inquiries related to their pension plan or other employee benefits. This resource is crucial for clarifying benefit details and addressing any concerns(21st Century Fox Americ…).
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