Definitions:

• Gift Type: The type of gift being used in the charitable gift annuity. This typically refers to whether the donor contributes cash, securities, real estate, or other assets to the charity in exchange for an annuity.


• Gift Amount: The total monetary value of the donation being made to the charity in exchange for the annuity. This can be cash, securities, or other types of property.


• First Beneficiary Age: The age of the primary beneficiary (usually the donor) who will receive annuity payments. The payment amount is often influenced by this age. If the beneficiary's next birthday is less than six months from the current date, use the beneficiary's age at their next birthday.


• Second Beneficiary Age: The age of a secondary beneficiary who will receive annuity payments after the first beneficiary passes away. This can impact the annuity calculation, as payment amounts may be adjusted based on life expectancy. If the beneficiary's next birthday is less than six months from the current date, use the beneficiary's age at their next birthday.


• Tax Bracket: The donor's marginal tax rate helps determine the tax implications of the charitable gift. The tax bracket impacts the size of the charitable deduction and the taxable portion of the annuity payments.


• Discount Rate: The rate used to calculate the present value of the annuity. The IRS permits the use of the current month's rate or either of the two previous months. This calculator uses the highest rate for that time period. The rate is based on current market conditions and how much the annuity payments are worth in today's terms. A higher discount rate generally means a lower annuity payment.


• Annual Payment: The amount the donor or beneficiary receives as a yearly payment from the charitable gift annuity. This payment is determined by the gift amount, the beneficiaries' ages, and the applicable discount rate.


• Annual Payment - Tax Free: The portion of the annual payment that is tax-free. This is often considered a return of the original gift amount, which is not subject to income tax.


• Annual Payment - Ordinary Income: The portion of the annual payment that is considered ordinary income and is subject to income tax. This portion usually represents earnings or interest from the original gift amount.


• Total Charitable Deduction: The amount the donor can deduct from their taxable income for the charitable gift made. This deduction is determined based on IRS rules, considering factors like the gift amount, the donor's age, and the annuity's expected payout duration.

Disclaimers:

• The calculation above is an estimate and is for illustrative purposes only. It does not constitute legal or tax advice. Contact us to discuss available options.