2012 GIVING & TAXES CENTER
Smart Giving Solutions in Uncertain Tax Times
Strategy #3: Accelerate income to take advantage of today's tax rates
Adjusting the amount of income you receive this year and next may also help you manage your taxes.
For example, if you are able to accelerate any of your deferred income or take an early bonus before the end of 2012, rather than waiting until next year, you will pay taxes at the current income tax rates rather than at the higher rates that are scheduled to go into effect next year.
Similarly, if you're planning to convert a traditional individual retirement account (IRA) to a Roth IRA to take advantage of the Roth's income-tax-free withdrawals (and other benefits) in 2012, making a charitable deduction may offset the increased income tax from the conversion.
Steps you might take now:
If you plan to accelerate income or convert to a Roth IRA this year, consider also increasing your planned charitable contributions in 2012 as well. The extra tax deduction from your donations may help offset the increase in your taxable income.
In addition, if the charitable donation is made to a public charity offering a donor-advised fund program, you'll be able to use your donation to support all of your favorite causes at any time.
To learn more:
See how a charitable donation may minimize the tax impact of a Roth conversion.