Indiana Charitable Gift Annuity
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How to fill out Charitable Gift Annuity?
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FAQ
Taxation of CGA payments.If the gift annuity is funded with cash, part of the payments will be taxed as ordinary income and part will be tax-free.
Annuity Gifts In general, the person who gives the gift is responsible for paying this tax. The Tax Code provides a lifetime exemption (currently $11.58 million per person in 2020). As long as your total lifetime gifts and estate are below this amount, you don't have to pay taxes when you gift an annuity.
Charitable gift annuity paymentsThe amount is fixed and will never fluctuate or adjust for inflation. But it's also guaranteed, backed by the charity's entire assets, not just your gift, and will continue for the lives of the donors no matter how well or poorly the investments of the annuity perform.
According to Kiplinger, your tax deduction is usually 25 to 55 percent of the amount you transferred to charity. Your tax deduction is calculated by taking the full amount of your contribution and subtracting the present value of the lifetime payments you're scheduled to receive.
If you own an annuity and give it to another individual as a gift, special income tax rules apply. You (the donor) are considered to have surrendered the contract and are subject to tax on the difference between the value of the contract (the cash surrender value) and the amount you have invested in the contract.
Individuals or couples can set up a charitable gift annuity. (You are the annuitants, which is the specific name for beneficiaries of annuities and many insurance policies.) Depending on the charity, your annuity can be funded with cash donations, but potentially also securities and gifts of personal property.
Tax reporting requirements. The instructions say: If cash or capital gain property is donated in exchange for a charitable gift annuity, report distributions from the annuity on Form 1099-R. Report in box 3 any amount from a charitable gift annuity that is taxable as capital gain.
