Calculate potential income and tax benefits from a Charitable Gift Annuity.
Your Estimated Results
Annual Income:
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First-Year Tax Savings:
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Implied Remainder Gift to Charity:
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Understanding Charitable Gift Annuities
A Charitable Gift Annuity (CGA) is a special contract between you and a qualified public charity.
In exchange for a current gift of cash or property, the charity promises to pay you (or another
designated beneficiary) a fixed income for life. This arrangement offers a unique blend of
income, tax benefits, and charitable giving.
How a Charitable Gift Annuity Works
When you establish a CGA, you transfer assets (like cash or appreciated securities) to a charity.
The charity then calculates your fixed annual payout based on several factors:
The size of your donation: The amount of assets you give.
Your age (or the age of your beneficiary): The older you are, the higher the payout rate typically.
The annuity payout rate: This rate is set by the American Council on Gift Annuities (ACGA) and varies by age.
In return for your gift, the charity provides you with a guaranteed income stream for life. A portion of your original donation is often considered a tax-deductible charitable contribution in the year of the gift. Furthermore, a portion of the annual payments you receive may be tax-free, depending on your age and the payout rate.
Key Components and Calculations
The calculations performed by this calculator are based on standard actuarial principles and tax regulations for CGAs.
1. Annual Income:
This is the fixed payment you will receive each year for the rest of your life.
Annual Income = Donation Amount * (Annuity Payout Rate / 100)
2. Charitable Income Tax Deduction:
This represents the immediate tax benefit you receive in the year you make the gift. It's calculated using the ACGA's recommended rates and IRS tables, which factor in the age of the annuitant and the expected future value of the remainder gift. For simplicity in this calculator, we use an estimated charitable deduction rate provided by the user.
Estimated Charitable Deduction = Donation Amount * (Estimated Charitable Deduction Rate / 100)
3. First-Year Tax Savings:
This is the estimated amount of income tax you save in the first year due to the charitable deduction.
First-Year Tax Savings = Estimated Charitable Deduction * (Your Income Tax Bracket / 100)
4. Implied Remainder Gift to Charity:
This is the portion of your original donation that is expected to remain with the charity after your lifetime. It's what the charity ultimately benefits from.
Implied Remainder Gift = Donation Amount - Estimated Charitable Deduction
Note: The actual tax deductibility and the taxability of payments can be complex and depend on specific IRS regulations and the rates set by the ACGA. This calculator provides an estimate for illustrative purposes. Consult with a qualified financial advisor or tax professional for personalized advice.
Benefits of a Charitable Gift Annuity:
Guaranteed Income: Provides a reliable income stream for life, unaffected by market fluctuations.
Tax Benefits: Offers an immediate income tax deduction and potential tax-free income.
Support a Cause: Allows you to make a significant gift to a charity you care about.
Simplicity: Generally simpler to set up than other planned giving vehicles.
A CGA can be an excellent option for individuals seeking a steady income in retirement, looking to reduce their tax burden, and wanting to support a charitable organization.