Year-End Giving

2011 has been an economic roller coaster, yet charitable organizations like ASHRAE Foundation continue to play an important role in our lives. In this newsletter, we offer answers to common questions about deadlines for tax deductions, IRA distributions, and Roth conversions. We hope this information will serve as a guide during the upcoming months as you consider your year-end gifts.

How much should I give this year?

Many ASHRAE members make gifts to the ASHRAE Foundation give because they are committed to our mission of advancing the art and science of HVAC&R. Others donate because they feel an obligation to give back to the profession that has been the source of their professional success and identity. Others give because it just feels good! But because donations are tax-deductible, charitable giving can make financial sense as well.

Now is a good time to get a handle on your tax liability for 2011. If you had more income and will owe more taxes this year, you may want to increase your giving before December 31. Consider talking with your financial advisors while you still have time to make a tax-deductible gift to ASHRAE Foundation for 2011.

Am I Eligible to Make Special Charitable Contributions from my IRA?

Owners of individual retirement accounts (IRAs) have the unique opportunity to make gifts to charity—but this opportunity expires on December 31, 2011. If you are 70.5 or older, you can directly transfer $100,000 per year tax-free to an eligible charity such as ASHRAE Foundation. This option is available for distributions from IRAs regardless of whether you itemize your deductions.

To qualify, the funds must be contributed directly by the IRA trustee to a public charity. Amounts transferred are not taxable, and no deduction is available for the transfer. Amounts transferred to a charity from an IRA will be subtracted from your required minimum distribution from your IRA.

Using your IRA distributions for charitable giving could save you more than just the taxes from an income tax charitable deduction. Making an IRA distribution to charity will reduce your taxable income. In situations in which an income tax charitable deduction wouldn't reduce taxes paid, using your IRA distributions for charitable giving will make a difference in income-based tax calculations.

Should I Consider a Roth Conversion and Charitable Giving?

Roth IRAs offer you the ability to enjoy tax-free income in retirement. Previous rules limited who could qualify for a Roth IRA. However, a change in the law in 2010 permits traditional IRAs to be converted to Roth IRAs regardless of income. Assets converted to a Roth IRA are considered taxable income in the year of the conversion. In other words, by converting your assets to a Roth IRA, you are accelerating the payment of future taxes in return for tax-free income later.

A silver lining is hidden in the recent market fluctuations. If your regular IRA has suffered declining values, you can convert your regular IRA to a Roth IRA at a much lower cost than when stock market values were high.

To reduce the increase of taxable income from a Roth IRA conversion, you can make offsetting charitable gifts such as a year-end donation to ASHRAE Foundation. Income tax charitable deductions may allow you to convert a larger percentage of your IRA balance without being bumped into a higher tax bracket.

How Do I Beat the Clock?

It's natural to procrastinate, but don't get stopped short at the end of the year. Gifts of cash made by check are considered complete on the date they are mailed and are deductible in the year of the mailing. Electronic gifts of securities are generally complete when they are deposited to ASHRAE Foundation's account, not when you request that your broker initiate the transfer.

Thank You for Your Support!

When you support ASHRAE Foundation, you are supporting professional development and research programs and providing scholarship assistance to deserving engineering students and providing ongoing support to advance ASHRAE's vital work.

If you have questions about how to support ASHRAE Foundation, please don't hesitate to contact Margaret Smith, at 678-539-1201 or MSmith@ashrae.org