Estimate your potential annuity payments and tax benefits.
(Often found on the charity's CGA plan, typically 5-9%)
Your Estimated Charitable Gift Annuity Results
Understanding Charitable Gift Annuities (CGAs)
A Charitable Gift Annuity (CGA) is a planned giving vehicle that allows you to make a significant gift to a charity while receiving a fixed stream of income for life. It's a wonderful way to support a cause you care about, secure a reliable income, and receive potential tax benefits.
How a CGA Works:
You Transfer Assets: You contribute cash or securities to a qualified charity.
Charity Pays You Income: In return, the charity promises to pay you (and a beneficiary, if you choose) a fixed amount for life. The payment amount is based on your age(s), the amount of your gift, and the annuity rate.
Charity Receives Remainder: When the income recipients pass away, the remaining assets in the annuity contract go to the charity to support its mission.
Key Benefits of a CGA:
Income for Life: Provides a predictable, fixed income stream, which can be especially valuable in retirement.
Immediate Tax Deduction: You can typically claim an immediate income tax deduction for the charitable portion of your gift in the year you make it.
Tax-Efficient Income Payments: A portion of your annuity payments may be tax-free for a period, and the rest is taxed at favorable capital gains rates (if funded with appreciated assets).
Support for a Cause: You directly support the charitable organization and its work.
Simplicity: CGAs are relatively simple to set up and administer compared to some other planned giving options.
Calculating Your CGA: The Math Behind the Calculator
This calculator provides an *estimate* based on common formulas. Actual results may vary based on the specific charity, applicable state regulations, and the exact details of the agreement.
Estimated Annuity Payment:
The annual annuity payment is calculated using the following formula:
Annual Payment = Donation Amount × (Charity's Assumed Rate / 100)
For example, if you donate $10,000 and the charity's assumed rate is 5.5%, your estimated annual payment would be $10,000 × (5.5 / 100) = $550.
Estimated Tax Deduction:
The calculation for the immediate tax deduction is more complex and typically involves:
Determining the "charitable interest", which is the present value of the future payments the charity will make to you.
Subtracting the charitable interest from the total donation amount. The result is the "income tax charitable deduction".
The present value of future payments depends on several factors, including the donor's age, the expected lifespan of the annuitant(s), the assumed rate of return used by the charity (often related to the charity's assumed rate but not identical), and mortality tables (like the IRS's Section 7520 rates). Because this involves actuarial calculations and specific IRS tables (which can change), this calculator simplifies this by providing a general estimation. A more precise calculation requires specialized software or consultation with the charity.
Taxation of Payments:
The portion of your annuity payments that is taxable depends on how the annuity was funded:
Funded with Cash: A portion of each payment will be tax-free for a period, and the remainder will be taxable as ordinary income.
Funded with Appreciated Securities: You'll spread the immediate capital gains tax over your expected lifetime. A portion of each payment will be tax-free until the capital gains are fully accounted for, and then the rest will be taxed at favorable capital gains rates.
The exact tax treatment is determined by the "exclusion ratio," which is calculated based on the charitable deduction and the age(s) of the annuitant(s).
Disclaimer: This calculator is for informational and estimation purposes only. It does not provide tax or legal advice. Consult with your tax advisor and the charity directly to discuss your specific situation and obtain precise figures before making any planned gifts.
function calculateAnnuity() {
var donationAmount = parseFloat(document.getElementById("donationAmount").value);
var donorAge = parseInt(document.getElementById("donorAge").value);
var secondDonorAge = document.getElementById("secondDonorAge").value ? parseInt(document.getElementById("secondDonorAge").value) : null;
var charityRate = parseFloat(document.getElementById("charityRate").value);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var additionalInfoP = document.getElementById("additional-info");
// Clear previous results
resultDiv.style.display = 'none';
resultValueDiv.textContent = ";
additionalInfoP.textContent = ";
// Basic input validation
if (isNaN(donationAmount) || donationAmount <= 0) {
alert("Please enter a valid donation amount.");
return;
}
if (isNaN(donorAge) || donorAge 120) {
alert("Please enter a valid age for the donor.");
return;
}
if (secondDonorAge !== null && (isNaN(secondDonorAge) || secondDonorAge 120)) {
alert("Please enter a valid age for the second donor if applicable.");
return;
}
if (isNaN(charityRate) || charityRate 15) { // Typically rates are between 5-9%, but allow some range
alert("Please enter a valid charity assumed rate (e.g., 5.5).");
return;
}
// — Calculation Logic —
// 1. Estimated Annual Annuity Payment
var estimatedAnnualPayment = donationAmount * (charityRate / 100);
// 2. Estimated Tax Deduction (Simplified Approximation)
// This is a very rough estimate. Real calculations use IRS tables (e.g., Table 1 & Table 12 for sec 7520 rates)
// and consider the duration of payments. We'll use a simplified factor based on age.
// Younger age = longer payout = smaller immediate deduction (larger charitable interest)
// Older age = shorter payout = larger immediate deduction (smaller charitable interest)
var ageFactor = donorAge;
if (secondDonorAge !== null) {
ageFactor = Math.min(donorAge, secondDonorAge); // Use the younger age for a more conservative estimate of deduction
}
// Hypothetical factors for exclusion ratio based on age. These are NOT official IRS factors.
var exclusionRatioFactor = 0.4; // Default factor
if (ageFactor = 60 && ageFactor = 70 && ageFactor = 80) {
exclusionRatioFactor = 0.6; // Highest deduction for very old donors
}
// Simplified charitable interest calculation: Donation * Factor (represents charitable portion)
var estimatedCharitableInterest = donationAmount * exclusionRatioFactor;
var estimatedTaxDeduction = donationAmount – estimatedCharitableInterest;
// Ensure deduction is not negative and not more than the donation itself
estimatedTaxDeduction = Math.max(0, estimatedTaxDeduction);
estimatedTaxDeduction = Math.min(estimatedTaxDeduction, donationAmount);
// — Display Results —
var resultHtml = "
Estimated Annual Payments:
";
resultHtml += "
$" + estimatedAnnualPayment.toFixed(2) + "
";
resultHtml += "Based on a " + charityRate + "% assumed rate.";
resultHtml += "";
resultHtml += "
Estimated Tax Deduction:
";
resultHtml += "
$" + estimatedTaxDeduction.toFixed(2) + "
";
resultHtml += "This is an estimated immediate income tax deduction. Actual deduction depends on IRS regulations and the charity's calculation.";
resultValueDiv.innerHTML = resultHtml;
resultDiv.style.display = 'block';
additionalInfoP.style.display = 'none'; // Hide the generic placeholder
// Update the additional info paragraph with a summary
var infoText = "Your estimated annual payment is $" + estimatedAnnualPayment.toFixed(2) + ". ";
infoText += "You may be able to claim an estimated immediate tax deduction of $" + estimatedTaxDeduction.toFixed(2) + ". ";
if (secondDonorAge !== null) {
infoText += "This calculation is based on a two-life annuity for donors aged " + donorAge + " and " + secondDonorAge + ". ";
} else {
infoText += "This calculation is based on a single-life annuity for a donor aged " + donorAge + ". ";
}
infoText += "Remember to consult with the charity and your tax advisor for precise figures.";
additionalInfoP.textContent = infoText;
additionalInfoP.style.display = 'block';
}