If expecting to have a high-income year due to large bonus or equity compensation, or because you will be realizing gains from long-term investments, you could be heading toward a bigger tax bill than you were expecting.
But the good news is that as you think about charitable giving, you might have additional opportunities to help reduce your taxes while maximizing your support for your favourite non-profits during different times of needs. Here are different ways in which giving to a charity organisation in Singapore can maximize your income.
Look Beyond Cash As A Donation
Rather than selling your non-cash assets like stock and mutual fund shares and donating the after-tax proceeds, it may be advantageous to donate these assets directly to charity. You will get two significant benefits as long as you have owned assets for more than a year.
You will generally be eligible to claim a tax deduction in the amount of the full fair market value and neither you nor the charity will pay any taxes on the gain. Because of this, you will be able to give as much as 20 percent more to charity than had you sold the asset and donated the after-tax proceeds. You can also donate assets that have increased their prices.
Donor-Advised Fund For Charitable Giving
Whether you choose to donate cash equivalents, stock or other appreciated assets, a donor advised fund is simple and an efficient way to make donations quickly and be eligible for a donation tax deductible. Instead of scrambling to write out checks or transfer stock to multiple charities, you can make a single donation to set up a donor-advised fund.
It is a dedicated charitable account used for sole purpose of supporting charities you care about. Then you are able to support any qualified public charity on the timetable that best suits you by recommending grants from the account to charities you care about. The fund can also be invested for potential growth resulting in more money for charity.
The Bottom Line
These are some of the ways you can maximize your income through giving to a charity organization in Singapore. Avoid the end of year scramble and support your favourite charities now. It’s time to consider how to have the greatest impact through your charitable giving. Actually, it is more critical than ever to think about charity giving to maximize your tax benefit.
