What is my income tax deduction based on?
Transfers to a charitable remainder trust will generate an income tax deduction for you, the donor, in the year of the contribution. The deduction is based upon the estimated present value of the remainder interest that will ultimately go to the charity. The calculation and the amount of deduction allowed is based upon several factors: Your life expectancy based on your age, if you are the beneficiary of the life income. The number of income beneficiaries you name and their ages – you will generally get less of a tax deduction if you name more than one beneficiary. The amount of income you want of the cash flow generated by your gift (you must take at least a 5% annual return up to a maximum of 50%), and the type of charitable remainder trust you select – Annuity Trusts and Unitrusts have different formulas for computing the tax deduction. .
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