 | | | Turn a Fringe Benefit Into a No-cost Life Insurance Gift
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Many people receive life insurance from their employers as a fringe benefit. But for insurance in excess of $50,000, tax law requires that the employee pay income tax and FICA on the cost of that coverage.
However, when the employee names In Defense of Animals as the sole beneficiary of any portion of the policy, there is no income tax due on the cost for that coverage. For those who do not need the excess protection for their families, this is an excellent gift-planning option. This plan simultaneously lowers the employee's income tax and employer's income tax with no out-of-pocket expense for the donor.
A 1993 change in the tax law has made this gift technique even more beneficial for highly compensated donors. The new law removed a cap on the compensation counted under the Medicare portion of the FICA tax. Those employees earning more than $135,000 save even more on their tax bill by making this kind of excess coverage a gift.
Life insurance benefits are easy to contribute. All that is required is that you indicate the change of beneficiary on a form available from your employee benefits or personnel department. You will also want to contact your payroll office so it can deduct the cost of the excess coverage insurance gift from your IRS Form W-2 at the end of the year.
Other forms of life insurance gifts can also benefit In Defense of Animals while reducing your income tax liability. You may consider contributing a paid-up policy, for which you can receive a charitable deduction for an amount roughly equal to the cash value of the policy. Or you may contribute a policy even though you are still making premium payments. In many cases you could then take a charitable deduction for your premium payments.
Our Director of Planned Giving, Nicole Otoupalik, has recently attended a three-day seminar on the latest techniques of planned giving. She would be happy to speak with you in confidence to discuss what she has learned and to help you decide which planned giving opportunities best fit your personal situation. If you have any questions or concerns, please feel free to call Nicole at 714-389-2823.
Donors are advised to consult their legal and financial advisors before claiming an income tax deduction.
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In Defense of Animals
Office of Planned Giving
3010 Kerner Blvd.
San Rafael, CA 94901 Contact
Nicole Otoupalik
Tel.: 714-389-2823
Fax: 208-247-8687
Email: nicole@idausa.org |
