This time of year, it is common to consider ways to lower your overall tax burden. At the PCA Foundation, we help Christians maximize their generosity while reducing their tax burden. When you save more on taxes, it allows you to be even more generous, sharing the love of Christ through giving.

At the PCA Foundation, we use buckets to help people think simply about the implications of when, what, and how they give on their taxes and on how much they can give. Most people allocate their money among four major categories: living expenses, savings, taxes, and giving.

The love of Christ spread across our hearts determines the allocation among the first three buckets, and should be a matter for the Holy Spirit’s work, not manipulation by professional fundraisers and stewardship teachers. 

Once you have determined in your heart the three bucket amounts, thanks to tax rules, you can give in certain ways that decrease the fourth bucket, taxes, and thereby increase the third, charitable giving, without reducing what you have determined for personal expenses and savings. 

Here’s an example: George and Carol own private stock that has grown in value from $250,000 to $1,000,000. They plan to sell this stock and know that they want to give at least $250,000 of the gain away to their church and other favorite ministries.

They have two options. 

The first option is to give cash sale proceeds after they sell the stock. In this scenario, the profit will be $750,000 and they will be subject to the capital gains tax of $112,500. This leaves up to $250,000 available for charity and $637,500 for personal expenses and savings.

The second option is for them to donate a portion of the stock to the PCA Foundation before selling the remainder. In this scenario, they will realize significantly less capital gain, so they can give significantly more value while retaining the same amount for personal expenses and savings.  They can reduce their tax burden to $75,000 and so give at least $37,500 more in value, or $287,500, to charity, and retain the same $637,500 for personal expenses and savings.  (And in fact, tax burden actually would go down and giving would go up by more because the larger gift produces a larger charitable deduction.)

As you can see, they lower their tax burden significantly by donating assets prior to liquidation. When church members use the PCA Foundation to facilitate their generosity, it often lowers their tax burden and makes even more funds available for charitable purposes. Even better, you can donate any asset and experience these advantages, whether it’s real estate, public stocks, or privately held businesses. 

To learn more about saving on taxes to give more, visit pcafoundation.com.