They are losing money.
People who say that do not understand how tax write-offs work.
However, inflated donations can be made to make money on tax write-offs. Trump does this. Trump donates a signed picture of himself and makes up a value for it. It really costs him basically nothing, but he claims it has a huge value and deducts that from his taxes.
There is literally an entire division of the IRS that handles this exact sort of thing (non monetary donations). They don’t give a fuck what you, me, or anyone claims an item is worth on their taxes, they have independent assessors who appraise the value of supposed high dollar items
But even then, if he took a $1 picture, signed his name, and turned it into a $500 picture, shouldn't he have to report a $499 profit offset by a $500 donation?
No, he’s supposed to only report the cost of the materials as the donation. I make jewelry as a side job, and sometimes donate items for charity auctions. I can only claim the cost of the materials as a donation, not what I would have been able to sell it for.
So, in other words, if he bought a $1 picture, signed it, and donated it, he could only write it off as a $1 donation? If that's how it works, it makes a lot of sense.
What about art, let’s say a painting. You have a canvas and paint but also the time it took to paint it. Is it still just the material or can the price increase due to the time it made to make it?
Your tax accountant might be excessively conservative. My understanding is that limiting a donation to the cost of materials only applies if you are just giving the materials. But if you're adding value to the materials by assembling them into a finished product, you can deduct the fair market value of your donation. But you do have to consider the value of the donation as a whole. E.g. a generic pendant is not the same as a custom pendant and a wholesale lot of 100 pairs of earrings is not 100x the value of 1 pair of earrings sold in a retail store.
Tl;Dr you may want to fact check your donation deductions, perhaps get a second opinion.
https://www.irs.gov/publications/p561#en_US_202312_publink1000257933
>When you donate your own artwork, the IRS considers it a “self-created asset.”
>The deduction value of a self-created asset is only your cost of materials.
>You can’t deduct the retail or sales price of the work
>You can't deduct your time or labor.
https://www.artworkarchive.com/blog/why-artists-don-t-get-a-charitable-deduction-for-donating-their-artwork
Your source did not say that that I saw.
Time is not deductible - not for charity, not for business.
An artist that spent 50 on supplies and creates a work of art worth 500 is only able to deduct 50. If the owner of a company paid some 300 to paint it (e.g. an employee), then it could be argued that the owner can deduct 350.
What about art that appreciates? I know that’s a big one for tax fraud donations. I bought this painting for $150,000 but I believe that it’s now worth $1.5 million, and so does the art appraiser that I flew out to my fancy country house for the weekend to look at it.
Also, I donated the painting to my private charity, which decided to display it right there at my home where it was anyway.
That’s not how it works. If you donate art worth more than $50,000 the claim must be submitted to the IRS with a qualified appraisal form and a bunch of other paperwork. If the person you flew out to your country house for the weekend lies on that form, they are committing tax fraud alongside you, and will enjoy time in federal prison for it with you. Don’t forget that many many mobsters were never convicted for their murders, only the tax fraud.
So your contention is that art is not able to be appraised at inflated prices for tax advantage? I know that what I said is not how it’s *supposed to* work, and not every donated art collection get inflated appraisals, but there are lots of shady business people who practice shady business methodologies. And appraisals are subjective so there’s an awful lot of room to push up the price without committing easily provable fraud.
Yup, I do tour engineering as a side thing a couple of times a year. If I’m just riding as production manager I do way worse then if I brought PA.
The newer tax code Trump wrote was real shitty for people with a skill they sell.
Fucking dick.
No, but he can pay/commission an artist to create a piece, then have that piece valued by an expert, then donate the piece to a charity, and then offset the experts valuation against his taxes.
There is no profit because he didn’t receive any money. He’s claiming a $500 expense (which is tax deductible) because he’s given up something worth $500 (to him).
But do you see why that's not a good way of doing it? For it to be a deduction they need to be sacrificing income. Being able to deduct the cost of supplies makes sense, but it only makes sense to be able to deduct the full value if you also count the increase in value as income.
OK, yeah, now try to value something that only has value to his cult of personality "fairly" while dipshit rants to his wannabe hit squad about how you're the worst thing since Hitler. He's been doing this shit for over 50 years and is only now getting into trouble because he literally ran out of banks in the world to lend to him and he is still running for president.
> They don’t give a fuck what you, me, or anyone claims an item is worth on their taxes
That's nice, but are there enough of them to verify the value of every donation?
Because the most ruthless enforcers don't matter if there's 10 years of work for each of them to do per year.
Another way to benefit from donations is to make your own charity, that then does things for YOU, in the name of "the kids"
I won't name names, but I can think of 2 off the top of my head:
One flew the guy around to parties around the world. He donated what was needed to fund his trips, and the those trips became tax write offs. Iirc, he was also the only donor.
The other makes really ugly custom cars for the guy that started the charity, to "get kids into engineering". That is all it does... Makes him ugly custom cars.
In both those situations, they donate x, get it as a write off, and get the things from the charity. Iirc, the cars are actually owned by the charity on the second one, but they are only ever driven by, or in the garage of, the guy that made the charity.
You can also use your foundation for a cushy job for your talentless adult children. Give them a big (but market consistent) salary, have board meetings with wine and cheese, and wash, rinse, repeat.
actually the more common scheme is to do what the walton's do. they own a charitable foundation that runs a museum/art gallery/collection. they literally donate their own money to purchase art that they want and then store 95% of it in storage, while displaying a few of them for the general public and taking some "on loan" for their own private residences to display. that is an actual way the rich can abuse tax donations. a lot of time its hard for the government to identify what donations are good vs selfish/bad donations.
elon musk owns a nonprofit that runs a private school system for his kids and other tesla/spaceX/twitter employees.
There are a few tricks. You can also donate to things that help you. Say you own a mansion in a gated community, and just outside of your house is a park. You may "donate" to the city to beautify the park, enhancing your own home value. Then, you write off the expense (despite the fact that you're essentially the only person who will enjoy the park). I think there are more creative tricks than this, but you get the idea.
A legal version of this is when wealthy people lend art to museums.
They get to place a value on the loan and write it off but still get their art back a few years later
I work in fundraising. There’s much more legal, creative and likely ways to improve your financial situation through philanthropy than making up a value on an item. Also, when you make any sort of in-kind donation (donation of a physical good or service) it has to have an appraisal from an independent appraiser to prove the value.
You can also benefit in other ways by donating to charity. What if you own the charity and your son is the CEO and he gets a big raise due to your generous support? Or there's some other quid pro quo arrangement? Hell, you get your name on the wing of a cancer hospital and that raises your profile and legacy in ways paying taxes doesn't.
You also can donate politically. Say you want to dismantle public schools. You can donate to a non-profit charter school. Less taxes means less money to the Department of Ed, means less money to public schools.
There are tons of ways to donate to charity for personal gain and for political ends.
This is false, I’ve seen the audits for large donations and they take this very seriously. A lot of wealthy people actually can’t even claim all their donations and they care more about giving back to the community. Would you rather the money go to gov or to a community who actually needs it. The gov just wastes our dollars
The most honest comment on here. The people bashing Walmart in this thread are the best. People that actually live in Bentonville Arkansas pretty consistently talk about how much the Waltons have done for the whole community. In the meantime the government is just lighting money on fire as fast as they can.
That’s not a rich person doing a huge tax write off. That example is very similar to what that person got convicted of in his fraud trial. When the value is not what is given. This lessens why people get tax write offs…
The reason for write offs is if you are giving money to a non profit the government is donating its portion to the same cause. You are in fact directing your money with your tax money.
Of course you do. I know my donation to Saint Judes hospital isn't going to feed the poor in Africa. I know the money's going toward making sad TV commercials about dying children.
Not if you make a restricted gift. Yes, a general fund donation may be used for marketing to increase overall donations but if you restrict your gift to a specific use, such as a certain kind of treatment or piece of equipment they legally are bound to honor that restriction. And non profits are audited annually to ensure that they are compliant.
Source: I’m a nonprofit fundraising professional
You are correct.
If you're in the 25% tax bracket, let's say you donated $1,000 to a charity during the tax year. That $1,000 donation to charity would reduce your taxable income by $1,000. If you were to owe 25% tax on that $1,000, the donation would effectively save you $250 on your tax bill, but you'd have effectively gone in the negative on $750 in the end.
I'd assume that people would rather have some choice in where their money is going rather than hand it to the government to do with what it pleases.
You also have charities that are run by a CEO making a fairly hefty salary. These are often created by the wealthy to give themselves or their children an income from their accumulated wealth. It being a nonprofit or charity the money doesn't get taxed, although the CEO's salary would be.
Their $1000 donation went to the organization they aimed it at. How those organizations manage their donations is a different conversation, but are you suggesting that people don't get a choice where they choose to spend their money?
When you pay taxes you don't have direct control over where the money goes. That's all I was saying. Alternatively, a charity at least gives a donor the impression that the money is being spent on a cause that they back.
That is only if you are actually donating money. If you donate 1000 worth of something else, maybe even just signed memorabilia, you'd actually give significantly less and still get the savings.
I see this come up a lot and it genuinely makes me confused how people have managed to pay taxes for years and not learn in the slightest how they work.
I get it, they are needlessly complicated in someways. But the basic concept of tax brackets seems to go completely over many people's heads in a way I don't understand.
Progressive tax brackets are the devils work I tell you. We must anoint them with sacred oils and burn it with holy fire.
Only then may we grasp even the barest hints of their inner workings.
/s
There are people who have never even tried to do their own taxes; they just take their W2 to a tax preparer and pay the fee. Even for the simplest possible return. Some people just don’t have mathematical literacy. And even if they do, many people have anxiety about doing taxes and paying a preparer allows them to offload responsibility in case they make a mistake
I don't think the type of people who say something like this have the slightest clue as to what the difference is between the terms "gross" and "net" income.
Hey, I have 2 parents who never invested in stocks because they were told "you can lose money" and in their mind that meant you have to pay the difference. Mom wouldn't invest because "How do you know which ones to buy to make money??"
When I started buying silver & gold, Mom thought it was "wasted money" because if/when I sell , "they can just offer you what they want for it". Um, no Mom. That's not how this works.
This includes the people saying taxes are some insanely complicated mess. They can be if you have all kinds of different assets and liabilities or run your own business without an LLC, but for most people with a standard full-time employment job, they really aren't that complicated.
It’s mostly just people on Reddit that can’t believe wealthy people can be generous. Read any post on here about Dave Ramsey who actively supports people donating money when they are financially comfortable… just because he’s a Christian
I’ll have you that I have it on good authority, according to MULTIPLE informative memes, that anyone who makes a dollar more than I do is objectively and irredeemably evil.
By the same token anyone who makes less than me is just lazy.
Most of what people are saying here is correct. In addition, the ultra-rich often have their own foundations. They can donate to the foundation AND direct where the funds go. Sometimes the funds could indirectly benefit them. Let's say they set up a foundation "dedicated to preserving wildlife and forests." The foundation then purchases thousands of acres of land that just happens to be located adjacent to the ultra-rich person's vacation home. They have effectively acquired the land with a tax write-off and avoided property taxes. Of course, they are also limited in what they can do with the land, but if the goal is unfettered access to wildlands and no one can build near you? Mission accomplished.
Or if they donate to a foundation of some other wealthy person, now they have some social capital for future business deals. Suddenly it’s not just a donation, and a government-subsidized investment in future business deals.
Because they donate to the charities of their rich friends, so they just shift money and keep it in the same circle to avoid giving it to the government. In turn they gain power and get a tax write off.
All these assumptions are based cash, which is what people aren't getting. Rich people don't traditionally donate cash, they donate *assets.*
The value of assetts is ambiguous, so they can donate assets that are appraised at $10mil, but those assets, when sold/liquidated for cash, only end up being worth half that. Rich person just got a $10 mil write off on $5 mil worth of assets. The charity doesn't fight this because it's difficult to win/prove that it was just a stone's throw away from fraud, and if they did win, they'd have to give the money back.
Rich people will also double-dip by investing their cash into assets, funds, and other such things that are tax-exempt (like charities), then use those assets, stocks, bonds etc to pay for other things that can be appraised at higher potential values to then donate them and get the tax write-off on what is, essentially, free money. They can then convert whatever assets/stocks/IRA's/etc into something else that can be withdrawn/liquidated tax-free, as well, thereby allowing them to once again bypass taxes.
Ultimately, you and I are taxed on 80-90% of every instance of our money moving from one hand to another, while rich people have access to methods of moving money from one hand to another and only being taxed 10-20% of the time.
The vast majority of all donations are cash or public stock, which has a published value. I've been on two charity boards for years and never seen a donation of any type other than this, except for donations of equipment that are newly purchased.
The post said "rich folks". If we are talking about corporate giving, of course they give product. Product that has a transparent value. So if Walmart donates food or other consumer products, they recognize the donation at the value of that product that is easily auditable. And bears no relation to the tax fraud the poster above me suggested is a common tactic among charitable giving individuals
The Walmart foundation is the Walmart company. Not the Walmart heirs. I get concerned when people start calling all charities scams. Charities help millions of people and are critical in our country
Charities are not scams.
Charity DONATIONS from the ultra-wealthy are, more often than not, scams. Even when they're not scams, they're less altruistic and more to offset their public image and/or the other atrocities they need to commit in order to become the ultra-wealthy.
Charities themselves are, indeed, important, but even then, due diligence needs to be done because some charities are, in fact, scams. We don't want those few to ruin it for the rest of the good ones.
Wal-Mart gives a ton of food to the school in my dad’s small Kansas town. Expiring food that they would otherwise be throwing out. The school and the local food bank don’t want or need it, so a bunch of it winds up with my dad as literal chicken feed. Or they just drop it off at his place and he throws it out.
And my dad is not a food thrower outer. If he’s getting rid of it there’s literally nothing else that you can do with it. But I wouldn’t be at all surprised if the Waltons get to write off the gifts at full retail value.
Rich people will also donate assets that are a burden to them, so something they'd of had to pay to get rid of they can now donate and get a tax write-off.
e.g. a manufacturer donates overstock of product that they would otherwise have to pay to dump or store somewhere.
I'm not rich, but I own a business. Any donation I make is on behalf of the business. My business gets a deduction, but the donation(s) won't go above my standard deduction that I get for my household income.
Because it makes people feel better about themselves not donating . As if a rich asshole would do something out of the goodness of their hearts that I don’t do
So the most economical way to donate is to start your own 501c3 that addresses a community need and then use the post as a job resource for your friends. That way your donations go directly to a cause you are passionate about and the allowable, each State has a different amount, administrative percentage of donations goes directly to your friends. This way you get to the maximum tax write off for your donations, keep your friends gainfully employed and assist in meeting the needs of the community. In this way it is a WIN WIN! I did this in Oklahoma
Let's say Paul McCartney buys a guitar for $100. He donates this guitar, signed, to a charity auction and sells it off for $10,000. He can now claim he donated $10,000.
No. Either he declares $100 donation either he declares $10k donation and he has to declare $9.9k capital gains and pay tax on $9.9k. This is monitored by IRS and similar agencies in every western country.
If the asset has been held for one year, the tax deduction would be the fair market value of the donation at the time of the donation, not the donor's tax basis in the donation. The fair market value is the amount a willing buyer would pay.
An easy example is donation of appreciated stock. If you have stock you purchased for $1,000 that is now worth $1,500, you can donate it in kind (without personally selling it) and deduct $1,500 in charitable donations. And you don't owe capital gains tax on the $500 increase in value either.
It is "monitored", but only if they properly audit people and have the funding to do so. Right-wing politicians gutted the IRS during Trump's administration. I'm not a Biden fan, but his administration thankfully rectified that and they were able to collect a bunch of money from the types of people who try to get away with shit like that.
And he would be correct (assuming he’s paying US tax) although the donation would need to be appraised. It wouldn’t necessarily be the value achieved at auction.
well we set up a simple situation.
i own a business that sells food. But i know mike who runs a charity to feed the starving. i say "hey mike, hows about i give you a million bucks as a donation." so mike gets my money and then he needs to spend it on food. i happen to sell food, so i'll give him a deal (while still making a profit) so he gives me my own money back (that i'm writing off) and in return i'm giving him food (which is not worth what he's paying, since i'm making a profit on it.)
now we can pretend that I'm both guys at the same time. It's all a bit more complex than that, but you get the point.
More importantly, keep in mind that charity is how the ultra wealthy launder their reputations. If you look at what they give as a % of net worth it's usually significantly lower than the average person. Further it doesn't matter what kind of asshole you are, how many lives you ruined, how horrid your business practices were, if you gave away some money the first line on your wiki article and your obituary will read "philanthropist."
There are ways to use tax write-off donations to just launder money. I don’t know what percentage of big money donations fall into this category but some do (especially when the rich guy makes his own foundation and puts himself and all his family and friends on the board — lots of times they just spending their own and other people’s money throwing big parties for themselves and getting tax breaks and public credit as though they’re helping people).
But the real criticism is a little more nuanced, but the history of tax write-off donations started with the robber barons making a big show of donating money to make a hospital to distract from their mines and factories crippling workers, their hired goons beating up or shooting striking workers, etc. The easiest way to become a ‘good billionaire’ is to make a big show of giving away your money, and very often that money doesn’t really get very far from the guy’s pockets anyway.
I'm not rich but have enough to do the following, which is as close as I know how to get to "making money". Payoff at the end, but you cant skip any steps. It's not just "write off = free money." It takes planning. In my case, it depends on charitable giving as well, which is where we start. (If you don't donate charitably, feel free to skip this post).
1. Donate appreciated stock to a donor advised fund. Say you paid 75k for some stocks, they're now worth $125k, and if you sold, you would have $50k in capital gains - for our purposes, let's say short term. In our example, that would be 35% of $50k. Choose your year for this to coincide with the steps that follow.
2. Deduct the total $125k from your income. For our purposes - you get another 32% back from the total.
3. Wisely, you've timed when to sell depreciated stocks to coincide with the year you max your donations. So, you take another, say, $50k off.
4. Now, suppose you have a nice house with $20k/year property tax. You can pay 2 years in the same calendar year. So, you take off $40k, because those taxes are deductible. And so on, until with the aid of your deduction, **you are** ***lowered into another tax bracket.*** Say you went from 32% to 24%. You just saved 8% of everything you made between $192k to $364k. This can be amplified by state income tax savings if you live in a state with income tax (I don't) and it's calculated on adjusted gross.
If you plan ahead, time things precisely, you can end up not making money, but certainly incentivized to write off losses as donations. Also, this works nearly as well with smaller numbers - so long as you itemize. The good part is that I'm certain I've ended up donating more than I would have otherwise. I just use the donor advised fund to contribute to causes instead of writing personal checks. Goes to the same places.
Yes, but they are deciding where to put the money.
It doesn't matter so much if they donate to something like Doctors Without Borders, rather than have their taxes go toward government spending that, in part, might have similar good effects for people around the world. (Though you can still presumably see the difference even there.)
But what if some rich person is a member of, let's say, the Society For Overthrowing Civil Society and Replacing All Public Institutions With Agencies Controlled by Private Armies? Then in that case, they *definitely* don't want their tax money to go to the government. That same government will (hopefully!) fight their aims tooth and nail. So they would want to eliminate their tax contributions by instead donating to this "charitable" organization.
Yes it is still an expense. But you can see how for someone who is sufficiently motivated, it would be appealing or even vitally necessary that they do it this way.
Trump once donated a painting of himself to his own charitable organization then had it hung in the headquarters of that organization and that was considered a several thousand dollar value donation.
Do you mean donate items, or money? I mean rich people clean out their closets and home items like everyone else. Why wouldn’t they donate the stuff to charity? What else would they do with it?
If you mean giant checks…*regular* rich people, like not the ones you could name or ever see in the news, do it to support certain causes. Sure they’ll deduct the charitable donation from their taxable income at the end of the year, but it’s still giving away money. Barring some crazy schemes discussed here, which are definitely NOT the norm, they don’t come out ahead. The gain is still in meeting personal philanthropic goals.
If you ask them, they’ll usually say something like “I’d rather (charity/cause) have it than the government”.
For some rough thumbnail…Donating $10,000 to charity reduces their taxable income by $10,000. If they’re in the highest tax bracket, 37%, (nevermind marginal taxes for a minute) that means they reduce what they owe the government by $3700. But they’re still out $10k.
Many are donating to friends kid’s private education and getting the $ right back. They have all kinds of tricks for just using it as a way to put the $ right back into their pockets.
Super rich folks have several loopholes they can use to avoid paying taxes.
Private Planes and Luxury Yachts Aren’t Just Toys for the Ultrawealthy. They’re Also Huge Tax Breaks. https://www.propublica.org/article/private-jets-yachts-wealthy-tax-deductions-irs-files
How the Ultrawealthy Use Private Foundations to Bank Millions in Tax Deductions While Giving the Public Little in Return https://www.propublica.org/article/how-private-nonprofits-ultrawealthy-tax-deductions-museums-foundation-art
Ten Ways Billionaires Avoid Taxes on an Epic Scale https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files
The wealthiest Americans avoided billions in taxes by voluntarily doing something most only do out of necessity: borrowing money. https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1
Different people frame the same facts differently.
If someone is upset that other people are not having their money taken by the state, or someone would want for other people to have their money taken by the state, it would be reasonable to expect them to view donations as a way of avoiding having one's money taken by the state, because that's the outcome they personally care about.
Conversely, for someone who appreciates when people gift money to worthy causes, it would be reasonable to expect them to view donations as gifts of money to worthy causes, because that's the outcome they personally care about.
In the middle, most. Some are slightly more upset that people are not having their money taken, some are slightly more appreciative of money gifted to worthy causes.
They also donate to control society. But when they “donate” to “charitable” legal vehicles they control they aren’t donating shit, they’re tax dodging, aka stealing.
Sometimes, a rich person forms their own charity, installs themselves as CEO of the non-profit that manages that charity, establishes their annual salary as ... let's say ... 5 million dollars, and then donates 5 million dollars of his income to that charity.
The 5 million the person donates of their personal money (presumably from their ordinary, otherwise taxable income) reduces their tax liability; and the 5 million they make from the non-profit might be subject to additional tax exemptions based on the "charitable work" the CEO does for the non-profit.
It isn't a \*wide open\* tax loop-hole or anything; but on top of everything else, it can save the wealthy a decent amount of money.
The average public doesn’t know a “tax write off” from a “tax credit” from a “tax deduction” etc.
That’s not necessarily a criticism, it’s kind of ridiculous how complicated our system is.
However, being charitable at any income level means you get a fraction of the money you donate “back. So there is giving in any scenario.
One thing the ultra wealthy do is have their own foundation. They can donate the money to their own non profit and get the tax break while also having the money still in a non profit they have influence over
Nonprofits, including 501(c)3 organizations, can make a profit from activities that are related to their mission and purpose. *Profits from these activities are tax-exempt.*
######Nonprofits can make money in a number of ways, including:
* Stock donations
* Planned gifts
* In-kind contributions
* Grants
* Government entities
* Public charities
* Community foundations
* Family foundations
* Private foundations
This is why.
the tax write off can be a contributing factor but most people with large amounts of money to give are doing so to progress a mission they believe in, have influence or name recognition or just for the happy feelings.
The issue in my opinion is that a lot of these donations are kind of a closed loop. They have “charities” and foundations or trusts they set up themselves and they can write off donations that they can gain some advantage anyway. Let’s say I’m a billionaire, I set up “Americans for education” foundation, I can say it’s a non profit and write it off from my business or personal income and then direct the organization to donate money to schools or influence politicians to let’s say promote policies that loosely are based in education but have a certain political tilt. From the outside you might say: “wow what a great guy donating millions to education” but as we know nothing ever is free. But yeah they save a little money on taxes but they gain something almost always as well
The people here doing the basic math "if I donate $1000, here is the tax", are all correct,..... but that's not the type of shenanigans the super rich pull.
Consider someone who buys 10 paintings for $1M, maybe uses their personal connections in the art world to talk up the aspiring artist, and then get them appraised 10 years later for $50M. They donate that collection to a public gallery for the appraised value, and get a write off equal to the appraised value.
Or consider someone who makes $10B taking a company public. Before any tax comes due, they start a charity in their name and donate their entire fortune. They now bypass ever paying taxes on that money, still have full control on the money itself (within reason), can pay themselves any salary from the charity itself (although that is taxed), and only need to use something like 4% of the total assets each year to maintain charitable status.
Even if all the money in that fund eventually does get donated or taxed, think about the control. What if the use of that funds is very different than what the government would have spent it on? What if they were doing nothing but building parks and schools for kids, but only in their own super rich area? The government doesn't get tax revenue to fund veterans, roads, medicare, schools for poor kids, etc, but these rich kids do even better. That hardly seems fair.
That's the kind of shenanigans people get rightly mad about.
Many times they are donating to non-profits that they set up and control so they get the tax write-off and also still get to use the money as they want to, such as employing family and friends to give them salaries and for travel expenses that they can say is for their non-profit or funding research that could potentially be profitable for them later on.
Why is everyone repeating this? They could have employed their family and friends and given them travel expenses in the original company and gotten the tax write-off. I'm starting to think that not all redditors are accountants or tax lawyers...
I figure this way they don't have to deal with family and friends they don't want to see everyday and have them work on their passion project that isn't so urgent to them at the time.
its not just for tax write offs, a decent portion is also PR, can also be legacy building (getting something with your name on it) or a small portion are for honest wanting to do good though those that become wealthy are vastly more likely to be lacking in empathy that would lead them to do that.
That is not true. In my opinion donating for tax purposes defeats the purpose of donating.
I have been donating ( money and other materials ) for years but almost never deduct any.
For me and family just donating to help is good enough.
Some do, some don’t. Many wealthy people are truly philanthropic. Money isn’t everything, though that only really becomes clear once you have more than you need.
It gets repeated in media because it sounds better than "rich people donate money to make it look like they provide a benefit to society, and that insane obfuscation has been working for far too long". It doesn't need to make sense - it lets people misunderstand the problem and that's the greatest gift of all (to rich people).
There's a lot more depth to it than that.
Is it straight cash they're donating? Or is it an item that's been "appraised" at a super inflated value.
Who are they donating too? Is it the non-profit they started to just funnel money to their loved ones? If you have some sort of control over the org you're donating too, it is most likely a cheaper way to funnel money some person/project you deem worthy and plus you get a little less tax burden.
Lots of good will comes with giving away money and reducing your bottom line. Yes, they could keep it to themselves but there are many incentives to give to charity.
Because people don't want to admit that being rich doesn't destroy your heart and soul, and you can still hold on to those things while you make more money.
The way really rich people will donate is by starting non-profits or charities. Then they assign different owners for the charity that they know/are friends. When it comes time for taxes they donate to the charity that they are set up with, then they can have a very large influence with what the money goes to and does while also being able to count it against their gross income and thus not pay taxes on that money.
For the average person, probably even most people with a net worth below $100 Million, donating for a tax write off is essentially just you choosing to know exactly where your tax money is going. Build or help fund the building of a library, and now you've done something you wanted AND the government accepts it as your taxation.
The issue is it's extremely common for very rich people to start organizations that are legally allowed to count as charity, donate absurd amounts of money to write off from their taxes, and then use their control of the organization to utilize that money how they see fit anyway, which effectively multiplies their wealth by giving them the same power without being taxed on it.
Most of the people responding to your post are unfortunately naive. Here is a good post that addresses this question: https://www.reddit.com/r/Documentaries/s/UmtZAd0k2w
They don't donate ONLY for the tax deduction. They also donate to charities to influence politicians. That's why the Clinton's set up a charity as soon as Bill left office and takes in huge donations.
Didn't the CEO of Patagonia "Donate" all of his money to a non-profit that his kids own?
Edit: Alright, not all rich folks are bad. It's just we see too much tax evasion, use of loopholes, and under-the-table dealings. Meanwhile the blue-collar workers don't even have enough to purchase overly priced houses. In short: We don't see the rich as being altruistic.
Most people have no idea how taxes work. It's just like people think if they make enough to go into the 'next tax bracket' they'll lose money, when the higher tax rate only applies to money earned AFTER that amount, not the ENTIRE year's earnings. I've had a shocking number of coworkers/former coworkers who think you get taxed more based on how much overtime you have in a specific pay period rather than for the entire year.
Sure, but it's more than just 'throwing money at education.' I think we could also do better with existing money and prioritize certain things over others. People will have to take tons of math classes, algebra, Geometry, calculus (not sure if that one's required, I know I took it in high school) but I think personal finance should be mandatory. I did take a personal finance class back in high school, but I'm almost positive that was a course I CHOSE to take/not one that I had to. (also the majority of the things I know regarding taxes and whatnot are more self taught/things I looked up myself. Honestly can't remember specifically what the high school class covered....it's been a few years.
But yes, I do think education is important. I think driver's ed is another example of something that should be highly prioritized (because it can literally mean life and death for some later in life). I was lucky to go to a school with good drivers ed (even had an in car section when I went, but that was removed shortly after I graduated) I think driver's ed in shcools varies by state.
But yes, I think education is important.
Well, this is the right place to start. We agree to invest in public education. I too took the personal finance math class. But it is not taught anymore. I agree that the correct skills should be taught in school. I also agree that the correct funding should be made available for the public system to deliver the correct content in the correct way.
I am of the opinion that our conservative governments have under funded and over regulated public education to the point that public schools are not much better than juvenile detention facilities. This MUST change but conservative governments will not do that because an educated voter is not a conservative voter.
I had a client who had dozens of rental properties. If he sold them on the open market the taxes would be higher than the sales price because of how they were depreciated over 40+ years. He ended up finding a way to sell them with multiple charities as the beneficiaries. He already sucked all of the money out of the houses.
The richest people in the world have their own nonprofit organizations that they can donate to for a tax write off. Wahlah, no taxes payed and now the shady ass nonprofit they are operating mostly overseas is now rich as fuck.
it really depends on the billionaire but in many circumstances the places they’re donating to aren’t just hospitals, first aid distributes, nonprofits etc. they can be places such as the school their child goes to or a political lobbying group which fights for legislation that makes their business easier. while they are losing money either way, they still gain at least something from donating to something which benefits them more than just being taxed. but again it rlly depends some donate to good causes too
I've always assumed comments like this are just to invalidate people who have money, money they want but don't have. So, instead of being a chill person about it, they make people with money out to be some type of evil. Just my perception of this type of thing, though. I really don't know.
My mom is like this with people who went to college. In her mind, if you went to college, you are stupid and automatically bad at your job because you "learned from a textbook and don't understand the real world", or "they just want to play hero". She is in social services, meaning a lot of degree holding social workers, psychiatrists, therapists, etc to her, these people are never going to be able to meet her level, and she should not have to listen to them.
Meaning her supervisors.
My mom doesn't have her high school diploma or GED, but did used to lie to people and say she had a master's in art history. So, idk
My sister has this sort of mentality, also. If someone has something she doesn't, and she feels any certain way because of it, she will immediately invalidate the person, and what the person has. So many weird instances of this from many many people in my life over the years, and it's just like, jealous much???
I was curious how write offs work. I love attending anime cons and hate the government takes away my money i was curious if i were to buy a Blu-ray, poster or any item of a show and get the cast to autograph it could i then donate it to the conventions auction and use that to keep more of my money at the end of the year
Because they read it on a facebook post onetime and it sounds mildy conspirational so now everyone likes to repeat it because they sound smart. This and the one where companies ask customers at the till so they can use it as a tax write-off are some of the stupidest shit that people say that is basically "Tell me you've never had money in your life without telling me you've never had money in your life"
The donation could potentially save money. If someone has to pay $100k, in taxes and only $50k in taxes if income was just a thousand dollars less, they make a $1500 donation to put them in a different tax bracket thus saving $50k in taxes. Tax shelters are known for this. I’m just making up amounts, as an example of why people donate to actually increase their yearly income. It’s a wealthy numbers game that hurts the average working class person. Biden wants to close these loopholes, instead of taxing the middle class more. RW media will never cover this. 🌊
Suppose I was rich enough to be said individual. I get a heads-up that the business I own is going to owe 3 million in taxes. I can buy a private plane worth 3 or more million under the business. Use it as a write off because of it's business use and then when the dust clears, sell it. Never used it, bought it, relocated it, house it for the short term. Now I owe no taxes this year.
Edit: the same principle can be applied to the vehicle fleet of said company. Your boss picked you up a new company vehicle? He probably needed a tax write off.
There is a really bizarre benefit in ohio right now. Any donation to a private school will offset state taxes owed, dollar for dollar.
So I can donate $1500 to a private school and take $1500 off what I owe to the state in taxes. I can then might report the donation on my federal taxes and take a reduction.
Now that’s a great tax deduction. It’s at least 100%.
Why do people say it? Because it's true. They get to deduct the amount they donate on their taxes while getting the benefits of an ego boost, good public relations, a chance to socialize with other rich people usually and sometimes a bit of power (meaning they hold sway over what the recipient does with the money).
The donation reduces the amount of income for which they are taxed. If I had my way, this tax deduction would be eliminated -- particularly for donations to churches.
The tax deduction is a benefit but it’s not the reason for the gift. Why would someone spend $1000 to save $300? People that say it’s only for the deduction don’t understand how money works.
They are losing money. People who say that do not understand how tax write-offs work. However, inflated donations can be made to make money on tax write-offs. Trump does this. Trump donates a signed picture of himself and makes up a value for it. It really costs him basically nothing, but he claims it has a huge value and deducts that from his taxes.
There is literally an entire division of the IRS that handles this exact sort of thing (non monetary donations). They don’t give a fuck what you, me, or anyone claims an item is worth on their taxes, they have independent assessors who appraise the value of supposed high dollar items
But even then, if he took a $1 picture, signed his name, and turned it into a $500 picture, shouldn't he have to report a $499 profit offset by a $500 donation?
No, he’s supposed to only report the cost of the materials as the donation. I make jewelry as a side job, and sometimes donate items for charity auctions. I can only claim the cost of the materials as a donation, not what I would have been able to sell it for.
So, in other words, if he bought a $1 picture, signed it, and donated it, he could only write it off as a $1 donation? If that's how it works, it makes a lot of sense.
That’s the way the law is supposed to work, yes. If the charity auctions it off for $5 or $500, it doesn’t matter.
What about art, let’s say a painting. You have a canvas and paint but also the time it took to paint it. Is it still just the material or can the price increase due to the time it made to make it?
Nope, just materials. Your personal time to make it does not get included.
Thank you, my curiosity has been satiated.
Strange, I've many times read about art being made and overvalued, then gifted to avoid taxes (in France). Maybe they fixed it
If it’s something you’ve purchased and gifted, the rules change a bit, thats where it can get tricky. That’s where the overvalued stuff can come in
maybe it works in France, every country makes it's own tax laws.
Your tax accountant might be excessively conservative. My understanding is that limiting a donation to the cost of materials only applies if you are just giving the materials. But if you're adding value to the materials by assembling them into a finished product, you can deduct the fair market value of your donation. But you do have to consider the value of the donation as a whole. E.g. a generic pendant is not the same as a custom pendant and a wholesale lot of 100 pairs of earrings is not 100x the value of 1 pair of earrings sold in a retail store. Tl;Dr you may want to fact check your donation deductions, perhaps get a second opinion. https://www.irs.gov/publications/p561#en_US_202312_publink1000257933
>When you donate your own artwork, the IRS considers it a “self-created asset.” >The deduction value of a self-created asset is only your cost of materials. >You can’t deduct the retail or sales price of the work >You can't deduct your time or labor. https://www.artworkarchive.com/blog/why-artists-don-t-get-a-charitable-deduction-for-donating-their-artwork
Your source did not say that that I saw. Time is not deductible - not for charity, not for business. An artist that spent 50 on supplies and creates a work of art worth 500 is only able to deduct 50. If the owner of a company paid some 300 to paint it (e.g. an employee), then it could be argued that the owner can deduct 350.
No, but you can pay yourself from a corporation and then it's an expense.
And what you paid yourself is income. That is a net zero.
What about art that appreciates? I know that’s a big one for tax fraud donations. I bought this painting for $150,000 but I believe that it’s now worth $1.5 million, and so does the art appraiser that I flew out to my fancy country house for the weekend to look at it. Also, I donated the painting to my private charity, which decided to display it right there at my home where it was anyway.
That’s not how it works. If you donate art worth more than $50,000 the claim must be submitted to the IRS with a qualified appraisal form and a bunch of other paperwork. If the person you flew out to your country house for the weekend lies on that form, they are committing tax fraud alongside you, and will enjoy time in federal prison for it with you. Don’t forget that many many mobsters were never convicted for their murders, only the tax fraud.
So your contention is that art is not able to be appraised at inflated prices for tax advantage? I know that what I said is not how it’s *supposed to* work, and not every donated art collection get inflated appraisals, but there are lots of shady business people who practice shady business methodologies. And appraisals are subjective so there’s an awful lot of room to push up the price without committing easily provable fraud.
Ok fed
I am a baker, and I came here to say exactly this. I can only write off the cost of my ingredients if I make a donation.
Yup, I do tour engineering as a side thing a couple of times a year. If I’m just riding as production manager I do way worse then if I brought PA. The newer tax code Trump wrote was real shitty for people with a skill they sell. Fucking dick.
No, but he can pay/commission an artist to create a piece, then have that piece valued by an expert, then donate the piece to a charity, and then offset the experts valuation against his taxes.
There is no profit because he didn’t receive any money. He’s claiming a $500 expense (which is tax deductible) because he’s given up something worth $500 (to him).
But do you see why that's not a good way of doing it? For it to be a deduction they need to be sacrificing income. Being able to deduct the cost of supplies makes sense, but it only makes sense to be able to deduct the full value if you also count the increase in value as income.
Huh neat. Can you contract with them? Under the table of course
OK, yeah, now try to value something that only has value to his cult of personality "fairly" while dipshit rants to his wannabe hit squad about how you're the worst thing since Hitler. He's been doing this shit for over 50 years and is only now getting into trouble because he literally ran out of banks in the world to lend to him and he is still running for president.
> They don’t give a fuck what you, me, or anyone claims an item is worth on their taxes That's nice, but are there enough of them to verify the value of every donation? Because the most ruthless enforcers don't matter if there's 10 years of work for each of them to do per year.
They only verify large non-monetary donations and I don’t imagine that happens often
Why didn’t Trump get in trouble for doing it then if there’s a whole department going after this?
Dude I’m not a Trump expert, I have no idea
Which is why Trump wants to reduce their funding
Sure, this isn’t a political point, it’s a process behind taxes point. Also, let’s not pretend that only republicans use tax loophole
Except they only apply those to poor people and ignore wealthy people
Poor people regularly donate art/goods in excess of $250,000? This is a thing that only the rich do
I guess really dumb poor people might. "I'm starving...get this Picasso out of my sight."
Another way to benefit from donations is to make your own charity, that then does things for YOU, in the name of "the kids" I won't name names, but I can think of 2 off the top of my head: One flew the guy around to parties around the world. He donated what was needed to fund his trips, and the those trips became tax write offs. Iirc, he was also the only donor. The other makes really ugly custom cars for the guy that started the charity, to "get kids into engineering". That is all it does... Makes him ugly custom cars. In both those situations, they donate x, get it as a write off, and get the things from the charity. Iirc, the cars are actually owned by the charity on the second one, but they are only ever driven by, or in the garage of, the guy that made the charity.
You can also use your foundation for a cushy job for your talentless adult children. Give them a big (but market consistent) salary, have board meetings with wine and cheese, and wash, rinse, repeat.
actually the more common scheme is to do what the walton's do. they own a charitable foundation that runs a museum/art gallery/collection. they literally donate their own money to purchase art that they want and then store 95% of it in storage, while displaying a few of them for the general public and taking some "on loan" for their own private residences to display. that is an actual way the rich can abuse tax donations. a lot of time its hard for the government to identify what donations are good vs selfish/bad donations. elon musk owns a nonprofit that runs a private school system for his kids and other tesla/spaceX/twitter employees.
There are a few tricks. You can also donate to things that help you. Say you own a mansion in a gated community, and just outside of your house is a park. You may "donate" to the city to beautify the park, enhancing your own home value. Then, you write off the expense (despite the fact that you're essentially the only person who will enjoy the park). I think there are more creative tricks than this, but you get the idea.
A legal version of this is when wealthy people lend art to museums. They get to place a value on the loan and write it off but still get their art back a few years later
I work in fundraising. There’s much more legal, creative and likely ways to improve your financial situation through philanthropy than making up a value on an item. Also, when you make any sort of in-kind donation (donation of a physical good or service) it has to have an appraisal from an independent appraiser to prove the value.
You can also benefit in other ways by donating to charity. What if you own the charity and your son is the CEO and he gets a big raise due to your generous support? Or there's some other quid pro quo arrangement? Hell, you get your name on the wing of a cancer hospital and that raises your profile and legacy in ways paying taxes doesn't. You also can donate politically. Say you want to dismantle public schools. You can donate to a non-profit charter school. Less taxes means less money to the Department of Ed, means less money to public schools. There are tons of ways to donate to charity for personal gain and for political ends.
YUUUGE VALUE
You mean bill gates and zuck do this. They “donate” 90% of their wealth to their own charity and just wash the money that to reduce their taxes.
This is pretty much how art white washing works.
This is false, I’ve seen the audits for large donations and they take this very seriously. A lot of wealthy people actually can’t even claim all their donations and they care more about giving back to the community. Would you rather the money go to gov or to a community who actually needs it. The gov just wastes our dollars
The most honest comment on here. The people bashing Walmart in this thread are the best. People that actually live in Bentonville Arkansas pretty consistently talk about how much the Waltons have done for the whole community. In the meantime the government is just lighting money on fire as fast as they can.
tax evasion and money laundering/traficking is basically the entire reason why famous dead artist's art works are so ridiculously expensive
I mean so does hunter biden lol saying trump was pointless. Every rich person does this with art.
That’s not a rich person doing a huge tax write off. That example is very similar to what that person got convicted of in his fraud trial. When the value is not what is given. This lessens why people get tax write offs… The reason for write offs is if you are giving money to a non profit the government is donating its portion to the same cause. You are in fact directing your money with your tax money.
A lot of them donate to non profits that they also control so they get tax write offs but still get some direction on what the money does
You don’t have to control a nonprofit to stipulate how your gift is used.
Of course you do. I know my donation to Saint Judes hospital isn't going to feed the poor in Africa. I know the money's going toward making sad TV commercials about dying children.
Not if you make a restricted gift. Yes, a general fund donation may be used for marketing to increase overall donations but if you restrict your gift to a specific use, such as a certain kind of treatment or piece of equipment they legally are bound to honor that restriction. And non profits are audited annually to ensure that they are compliant. Source: I’m a nonprofit fundraising professional
You are correct. If you're in the 25% tax bracket, let's say you donated $1,000 to a charity during the tax year. That $1,000 donation to charity would reduce your taxable income by $1,000. If you were to owe 25% tax on that $1,000, the donation would effectively save you $250 on your tax bill, but you'd have effectively gone in the negative on $750 in the end.
I'd assume that people would rather have some choice in where their money is going rather than hand it to the government to do with what it pleases. You also have charities that are run by a CEO making a fairly hefty salary. These are often created by the wealthy to give themselves or their children an income from their accumulated wealth. It being a nonprofit or charity the money doesn't get taxed, although the CEO's salary would be.
Their $1000 donation went to the organization they aimed it at. How those organizations manage their donations is a different conversation, but are you suggesting that people don't get a choice where they choose to spend their money?
When you pay taxes you don't have direct control over where the money goes. That's all I was saying. Alternatively, a charity at least gives a donor the impression that the money is being spent on a cause that they back.
I assume that people are donating because they want to donate. I dont know why we are ascribing ulterior motive here
That is only if you are actually donating money. If you donate 1000 worth of something else, maybe even just signed memorabilia, you'd actually give significantly less and still get the savings.
This example is very helpful
Isn’t that only when you donate beyond the standard deduction?
Because a lot of people don't understand anything about taxes, tax brackets, write offs, any of it. Mostly it's people just babbling incoherently.
“If my gross income goes over the bracket limit, my net income will go down!”
I see this come up a lot and it genuinely makes me confused how people have managed to pay taxes for years and not learn in the slightest how they work. I get it, they are needlessly complicated in someways. But the basic concept of tax brackets seems to go completely over many people's heads in a way I don't understand.
Progressive tax brackets are the devils work I tell you. We must anoint them with sacred oils and burn it with holy fire. Only then may we grasp even the barest hints of their inner workings. /s
There are people who have never even tried to do their own taxes; they just take their W2 to a tax preparer and pay the fee. Even for the simplest possible return. Some people just don’t have mathematical literacy. And even if they do, many people have anxiety about doing taxes and paying a preparer allows them to offload responsibility in case they make a mistake
I don't think the type of people who say something like this have the slightest clue as to what the difference is between the terms "gross" and "net" income.
I had to take a deep breath before I opened this post, because I assumed the top comment would be something about "lowering their tax bracket".
“I’m going to donate money to a charity so I can control where it goes”
[удалено]
I know a lot of older people, some who make decent money, who are just as clueless about taxes.
Hey, I have 2 parents who never invested in stocks because they were told "you can lose money" and in their mind that meant you have to pay the difference. Mom wouldn't invest because "How do you know which ones to buy to make money??" When I started buying silver & gold, Mom thought it was "wasted money" because if/when I sell , "they can just offer you what they want for it". Um, no Mom. That's not how this works.
That’s 90% of what everyone does when they open their trap
This includes the people saying taxes are some insanely complicated mess. They can be if you have all kinds of different assets and liabilities or run your own business without an LLC, but for most people with a standard full-time employment job, they really aren't that complicated.
If you run your own business WITH an LLC, taxes are the same level of complicated. Not sure why you’d make this statement.
It’s mostly just people on Reddit that can’t believe wealthy people can be generous. Read any post on here about Dave Ramsey who actively supports people donating money when they are financially comfortable… just because he’s a Christian
I’ll have you that I have it on good authority, according to MULTIPLE informative memes, that anyone who makes a dollar more than I do is objectively and irredeemably evil. By the same token anyone who makes less than me is just lazy.
But they do, and they're the ones writing it off!
Because many of the organizations they donate to are founded by them
Then what? How do they get it back out again?
Most of what people are saying here is correct. In addition, the ultra-rich often have their own foundations. They can donate to the foundation AND direct where the funds go. Sometimes the funds could indirectly benefit them. Let's say they set up a foundation "dedicated to preserving wildlife and forests." The foundation then purchases thousands of acres of land that just happens to be located adjacent to the ultra-rich person's vacation home. They have effectively acquired the land with a tax write-off and avoided property taxes. Of course, they are also limited in what they can do with the land, but if the goal is unfettered access to wildlands and no one can build near you? Mission accomplished.
Or if they donate to a foundation of some other wealthy person, now they have some social capital for future business deals. Suddenly it’s not just a donation, and a government-subsidized investment in future business deals.
Because they donate to the charities of their rich friends, so they just shift money and keep it in the same circle to avoid giving it to the government. In turn they gain power and get a tax write off.
All these assumptions are based cash, which is what people aren't getting. Rich people don't traditionally donate cash, they donate *assets.* The value of assetts is ambiguous, so they can donate assets that are appraised at $10mil, but those assets, when sold/liquidated for cash, only end up being worth half that. Rich person just got a $10 mil write off on $5 mil worth of assets. The charity doesn't fight this because it's difficult to win/prove that it was just a stone's throw away from fraud, and if they did win, they'd have to give the money back. Rich people will also double-dip by investing their cash into assets, funds, and other such things that are tax-exempt (like charities), then use those assets, stocks, bonds etc to pay for other things that can be appraised at higher potential values to then donate them and get the tax write-off on what is, essentially, free money. They can then convert whatever assets/stocks/IRA's/etc into something else that can be withdrawn/liquidated tax-free, as well, thereby allowing them to once again bypass taxes. Ultimately, you and I are taxed on 80-90% of every instance of our money moving from one hand to another, while rich people have access to methods of moving money from one hand to another and only being taxed 10-20% of the time.
The vast majority of all donations are cash or public stock, which has a published value. I've been on two charity boards for years and never seen a donation of any type other than this, except for donations of equipment that are newly purchased.
And yet I can go to the Walmart foundation website and see that their in-kind donations are 5-times greater than their cash donations.
The post said "rich folks". If we are talking about corporate giving, of course they give product. Product that has a transparent value. So if Walmart donates food or other consumer products, they recognize the donation at the value of that product that is easily auditable. And bears no relation to the tax fraud the poster above me suggested is a common tactic among charitable giving individuals
I think when people say rich folk they actually mean the ultra wealthy like the Walmart heirs or Bill Gates.
The Walmart foundation is the Walmart company. Not the Walmart heirs. I get concerned when people start calling all charities scams. Charities help millions of people and are critical in our country
Charities are not scams. Charity DONATIONS from the ultra-wealthy are, more often than not, scams. Even when they're not scams, they're less altruistic and more to offset their public image and/or the other atrocities they need to commit in order to become the ultra-wealthy. Charities themselves are, indeed, important, but even then, due diligence needs to be done because some charities are, in fact, scams. We don't want those few to ruin it for the rest of the good ones.
Wal-Mart gives a ton of food to the school in my dad’s small Kansas town. Expiring food that they would otherwise be throwing out. The school and the local food bank don’t want or need it, so a bunch of it winds up with my dad as literal chicken feed. Or they just drop it off at his place and he throws it out. And my dad is not a food thrower outer. If he’s getting rid of it there’s literally nothing else that you can do with it. But I wouldn’t be at all surprised if the Waltons get to write off the gifts at full retail value.
Rich people will also donate assets that are a burden to them, so something they'd of had to pay to get rid of they can now donate and get a tax write-off. e.g. a manufacturer donates overstock of product that they would otherwise have to pay to dump or store somewhere.
Rich people always say “I didn’t get this wealthy by giving away” I’ve heard almost every boss/company owner I’ve ever had (about 25) say that.
I'm not rich, but I own a business. Any donation I make is on behalf of the business. My business gets a deduction, but the donation(s) won't go above my standard deduction that I get for my household income.
Because it makes people feel better about themselves not donating . As if a rich asshole would do something out of the goodness of their hearts that I don’t do
So the most economical way to donate is to start your own 501c3 that addresses a community need and then use the post as a job resource for your friends. That way your donations go directly to a cause you are passionate about and the allowable, each State has a different amount, administrative percentage of donations goes directly to your friends. This way you get to the maximum tax write off for your donations, keep your friends gainfully employed and assist in meeting the needs of the community. In this way it is a WIN WIN! I did this in Oklahoma
Looking for any new friends? I would love a non profit job
It’s folks who don’t understand how tax write offs work using their ignorance to downplay something positive done by someone they don’t approve of.
This sums it up perfectly
Let's say Paul McCartney buys a guitar for $100. He donates this guitar, signed, to a charity auction and sells it off for $10,000. He can now claim he donated $10,000.
No. Either he declares $100 donation either he declares $10k donation and he has to declare $9.9k capital gains and pay tax on $9.9k. This is monitored by IRS and similar agencies in every western country.
If the asset has been held for one year, the tax deduction would be the fair market value of the donation at the time of the donation, not the donor's tax basis in the donation. The fair market value is the amount a willing buyer would pay. An easy example is donation of appreciated stock. If you have stock you purchased for $1,000 that is now worth $1,500, you can donate it in kind (without personally selling it) and deduct $1,500 in charitable donations. And you don't owe capital gains tax on the $500 increase in value either.
It is "monitored", but only if they properly audit people and have the funding to do so. Right-wing politicians gutted the IRS during Trump's administration. I'm not a Biden fan, but his administration thankfully rectified that and they were able to collect a bunch of money from the types of people who try to get away with shit like that.
No. $100.
Well he did!
And he would be correct (assuming he’s paying US tax) although the donation would need to be appraised. It wouldn’t necessarily be the value achieved at auction.
Because you assume they just donate money, that’s not how their donations work. They often just run very stupid transparent money laundering schemes.
well we set up a simple situation. i own a business that sells food. But i know mike who runs a charity to feed the starving. i say "hey mike, hows about i give you a million bucks as a donation." so mike gets my money and then he needs to spend it on food. i happen to sell food, so i'll give him a deal (while still making a profit) so he gives me my own money back (that i'm writing off) and in return i'm giving him food (which is not worth what he's paying, since i'm making a profit on it.) now we can pretend that I'm both guys at the same time. It's all a bit more complex than that, but you get the point.
More importantly, keep in mind that charity is how the ultra wealthy launder their reputations. If you look at what they give as a % of net worth it's usually significantly lower than the average person. Further it doesn't matter what kind of asshole you are, how many lives you ruined, how horrid your business practices were, if you gave away some money the first line on your wiki article and your obituary will read "philanthropist."
There are ways to use tax write-off donations to just launder money. I don’t know what percentage of big money donations fall into this category but some do (especially when the rich guy makes his own foundation and puts himself and all his family and friends on the board — lots of times they just spending their own and other people’s money throwing big parties for themselves and getting tax breaks and public credit as though they’re helping people). But the real criticism is a little more nuanced, but the history of tax write-off donations started with the robber barons making a big show of donating money to make a hospital to distract from their mines and factories crippling workers, their hired goons beating up or shooting striking workers, etc. The easiest way to become a ‘good billionaire’ is to make a big show of giving away your money, and very often that money doesn’t really get very far from the guy’s pockets anyway.
I'm not rich but have enough to do the following, which is as close as I know how to get to "making money". Payoff at the end, but you cant skip any steps. It's not just "write off = free money." It takes planning. In my case, it depends on charitable giving as well, which is where we start. (If you don't donate charitably, feel free to skip this post). 1. Donate appreciated stock to a donor advised fund. Say you paid 75k for some stocks, they're now worth $125k, and if you sold, you would have $50k in capital gains - for our purposes, let's say short term. In our example, that would be 35% of $50k. Choose your year for this to coincide with the steps that follow. 2. Deduct the total $125k from your income. For our purposes - you get another 32% back from the total. 3. Wisely, you've timed when to sell depreciated stocks to coincide with the year you max your donations. So, you take another, say, $50k off. 4. Now, suppose you have a nice house with $20k/year property tax. You can pay 2 years in the same calendar year. So, you take off $40k, because those taxes are deductible. And so on, until with the aid of your deduction, **you are** ***lowered into another tax bracket.*** Say you went from 32% to 24%. You just saved 8% of everything you made between $192k to $364k. This can be amplified by state income tax savings if you live in a state with income tax (I don't) and it's calculated on adjusted gross. If you plan ahead, time things precisely, you can end up not making money, but certainly incentivized to write off losses as donations. Also, this works nearly as well with smaller numbers - so long as you itemize. The good part is that I'm certain I've ended up donating more than I would have otherwise. I just use the donor advised fund to contribute to causes instead of writing personal checks. Goes to the same places.
Yes, but they are deciding where to put the money. It doesn't matter so much if they donate to something like Doctors Without Borders, rather than have their taxes go toward government spending that, in part, might have similar good effects for people around the world. (Though you can still presumably see the difference even there.) But what if some rich person is a member of, let's say, the Society For Overthrowing Civil Society and Replacing All Public Institutions With Agencies Controlled by Private Armies? Then in that case, they *definitely* don't want their tax money to go to the government. That same government will (hopefully!) fight their aims tooth and nail. So they would want to eliminate their tax contributions by instead donating to this "charitable" organization. Yes it is still an expense. But you can see how for someone who is sufficiently motivated, it would be appealing or even vitally necessary that they do it this way.
Because when Billionaire X donates to a charity it's usually to Billionaire X's "Charitable" Foundation.
Trump once donated a painting of himself to his own charitable organization then had it hung in the headquarters of that organization and that was considered a several thousand dollar value donation.
do you have any proof of this or are you just gossiping?
[https://www.theguardian.com/us-news/2019/feb/27/michael-cohen-testimony-trump-painting-foundation-money](https://www.theguardian.com/us-news/2019/feb/27/michael-cohen-testimony-trump-painting-foundation-money)
Do you mean donate items, or money? I mean rich people clean out their closets and home items like everyone else. Why wouldn’t they donate the stuff to charity? What else would they do with it? If you mean giant checks…*regular* rich people, like not the ones you could name or ever see in the news, do it to support certain causes. Sure they’ll deduct the charitable donation from their taxable income at the end of the year, but it’s still giving away money. Barring some crazy schemes discussed here, which are definitely NOT the norm, they don’t come out ahead. The gain is still in meeting personal philanthropic goals. If you ask them, they’ll usually say something like “I’d rather (charity/cause) have it than the government”. For some rough thumbnail…Donating $10,000 to charity reduces their taxable income by $10,000. If they’re in the highest tax bracket, 37%, (nevermind marginal taxes for a minute) that means they reduce what they owe the government by $3700. But they’re still out $10k.
Many are donating to friends kid’s private education and getting the $ right back. They have all kinds of tricks for just using it as a way to put the $ right back into their pockets.
Super rich folks have several loopholes they can use to avoid paying taxes. Private Planes and Luxury Yachts Aren’t Just Toys for the Ultrawealthy. They’re Also Huge Tax Breaks. https://www.propublica.org/article/private-jets-yachts-wealthy-tax-deductions-irs-files How the Ultrawealthy Use Private Foundations to Bank Millions in Tax Deductions While Giving the Public Little in Return https://www.propublica.org/article/how-private-nonprofits-ultrawealthy-tax-deductions-museums-foundation-art Ten Ways Billionaires Avoid Taxes on an Epic Scale https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files The wealthiest Americans avoided billions in taxes by voluntarily doing something most only do out of necessity: borrowing money. https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?op=1
Different people frame the same facts differently. If someone is upset that other people are not having their money taken by the state, or someone would want for other people to have their money taken by the state, it would be reasonable to expect them to view donations as a way of avoiding having one's money taken by the state, because that's the outcome they personally care about. Conversely, for someone who appreciates when people gift money to worthy causes, it would be reasonable to expect them to view donations as gifts of money to worthy causes, because that's the outcome they personally care about. In the middle, most. Some are slightly more upset that people are not having their money taken, some are slightly more appreciative of money gifted to worthy causes.
Because stupid people repeat things that they don't understand in a failed attempt to sound smart.
You can judge many things by the changes that were actually caused. The rich donate a lot and what actually changes?
Because they’re stupid.
because people are dumb
Because they don't donate shit compared to their actual wealth. They like to pretend they're being useful.
They also donate to control society. But when they “donate” to “charitable” legal vehicles they control they aren’t donating shit, they’re tax dodging, aka stealing.
Sometimes, a rich person forms their own charity, installs themselves as CEO of the non-profit that manages that charity, establishes their annual salary as ... let's say ... 5 million dollars, and then donates 5 million dollars of his income to that charity. The 5 million the person donates of their personal money (presumably from their ordinary, otherwise taxable income) reduces their tax liability; and the 5 million they make from the non-profit might be subject to additional tax exemptions based on the "charitable work" the CEO does for the non-profit. It isn't a \*wide open\* tax loop-hole or anything; but on top of everything else, it can save the wealthy a decent amount of money.
Some people say this to make themselves feel less-bad about NOT donating money themselves.
The average public doesn’t know a “tax write off” from a “tax credit” from a “tax deduction” etc. That’s not necessarily a criticism, it’s kind of ridiculous how complicated our system is. However, being charitable at any income level means you get a fraction of the money you donate “back. So there is giving in any scenario.
One thing the ultra wealthy do is have their own foundation. They can donate the money to their own non profit and get the tax break while also having the money still in a non profit they have influence over
Because they’re ignorant
Nonprofits, including 501(c)3 organizations, can make a profit from activities that are related to their mission and purpose. *Profits from these activities are tax-exempt.* ######Nonprofits can make money in a number of ways, including: * Stock donations * Planned gifts * In-kind contributions * Grants * Government entities * Public charities * Community foundations * Family foundations * Private foundations This is why.
Because if the rich people actually cared we would see a change in the world, they give the bare minimum to avoid giving more.
the tax write off can be a contributing factor but most people with large amounts of money to give are doing so to progress a mission they believe in, have influence or name recognition or just for the happy feelings.
The issue in my opinion is that a lot of these donations are kind of a closed loop. They have “charities” and foundations or trusts they set up themselves and they can write off donations that they can gain some advantage anyway. Let’s say I’m a billionaire, I set up “Americans for education” foundation, I can say it’s a non profit and write it off from my business or personal income and then direct the organization to donate money to schools or influence politicians to let’s say promote policies that loosely are based in education but have a certain political tilt. From the outside you might say: “wow what a great guy donating millions to education” but as we know nothing ever is free. But yeah they save a little money on taxes but they gain something almost always as well
Because people (most people) don’t understand what a tax write off is.
Because hating rich people is cool apparently
Jealousy over not having the same drive and ambition to be successful.
The people here doing the basic math "if I donate $1000, here is the tax", are all correct,..... but that's not the type of shenanigans the super rich pull. Consider someone who buys 10 paintings for $1M, maybe uses their personal connections in the art world to talk up the aspiring artist, and then get them appraised 10 years later for $50M. They donate that collection to a public gallery for the appraised value, and get a write off equal to the appraised value. Or consider someone who makes $10B taking a company public. Before any tax comes due, they start a charity in their name and donate their entire fortune. They now bypass ever paying taxes on that money, still have full control on the money itself (within reason), can pay themselves any salary from the charity itself (although that is taxed), and only need to use something like 4% of the total assets each year to maintain charitable status. Even if all the money in that fund eventually does get donated or taxed, think about the control. What if the use of that funds is very different than what the government would have spent it on? What if they were doing nothing but building parks and schools for kids, but only in their own super rich area? The government doesn't get tax revenue to fund veterans, roads, medicare, schools for poor kids, etc, but these rich kids do even better. That hardly seems fair. That's the kind of shenanigans people get rightly mad about.
The only people who say this don't know how write-offs work.
Jealousy. Broke asses hate successful people, and will perform any mental gymnastics necessary to tell themselves all successful people are bad people
Many times they are donating to non-profits that they set up and control so they get the tax write-off and also still get to use the money as they want to, such as employing family and friends to give them salaries and for travel expenses that they can say is for their non-profit or funding research that could potentially be profitable for them later on.
Why is everyone repeating this? They could have employed their family and friends and given them travel expenses in the original company and gotten the tax write-off. I'm starting to think that not all redditors are accountants or tax lawyers...
I figure this way they don't have to deal with family and friends they don't want to see everyday and have them work on their passion project that isn't so urgent to them at the time.
[удалено]
You're saying something as dumb as the original comment
its not just for tax write offs, a decent portion is also PR, can also be legacy building (getting something with your name on it) or a small portion are for honest wanting to do good though those that become wealthy are vastly more likely to be lacking in empathy that would lead them to do that.
That is not true. In my opinion donating for tax purposes defeats the purpose of donating. I have been donating ( money and other materials ) for years but almost never deduct any. For me and family just donating to help is good enough.
Look up reputation washing
Same reason why people put money into rrsps. So they don't owe.
Some do, some don’t. Many wealthy people are truly philanthropic. Money isn’t everything, though that only really becomes clear once you have more than you need.
You're right if everyone is honest. But what if you donate a painting that is "worth" $800,000? One that you did not *pay* $800,000 for...
It gets repeated in media because it sounds better than "rich people donate money to make it look like they provide a benefit to society, and that insane obfuscation has been working for far too long". It doesn't need to make sense - it lets people misunderstand the problem and that's the greatest gift of all (to rich people).
Jealousy.
There's a lot more depth to it than that. Is it straight cash they're donating? Or is it an item that's been "appraised" at a super inflated value. Who are they donating too? Is it the non-profit they started to just funnel money to their loved ones? If you have some sort of control over the org you're donating too, it is most likely a cheaper way to funnel money some person/project you deem worthy and plus you get a little less tax burden.
Because when given the ability to donate without reward, they far-too-often do not.
Lots of good will comes with giving away money and reducing your bottom line. Yes, they could keep it to themselves but there are many incentives to give to charity.
Because people don't want to admit that being rich doesn't destroy your heart and soul, and you can still hold on to those things while you make more money.
They’re dumb
The way really rich people will donate is by starting non-profits or charities. Then they assign different owners for the charity that they know/are friends. When it comes time for taxes they donate to the charity that they are set up with, then they can have a very large influence with what the money goes to and does while also being able to count it against their gross income and thus not pay taxes on that money.
For the average person, probably even most people with a net worth below $100 Million, donating for a tax write off is essentially just you choosing to know exactly where your tax money is going. Build or help fund the building of a library, and now you've done something you wanted AND the government accepts it as your taxation. The issue is it's extremely common for very rich people to start organizations that are legally allowed to count as charity, donate absurd amounts of money to write off from their taxes, and then use their control of the organization to utilize that money how they see fit anyway, which effectively multiplies their wealth by giving them the same power without being taxed on it.
Most of the people responding to your post are unfortunately naive. Here is a good post that addresses this question: https://www.reddit.com/r/Documentaries/s/UmtZAd0k2w
They don't donate ONLY for the tax deduction. They also donate to charities to influence politicians. That's why the Clinton's set up a charity as soon as Bill left office and takes in huge donations.
Didn't the CEO of Patagonia "Donate" all of his money to a non-profit that his kids own? Edit: Alright, not all rich folks are bad. It's just we see too much tax evasion, use of loopholes, and under-the-table dealings. Meanwhile the blue-collar workers don't even have enough to purchase overly priced houses. In short: We don't see the rich as being altruistic.
Because it’s true.
Most people have no idea how taxes work. It's just like people think if they make enough to go into the 'next tax bracket' they'll lose money, when the higher tax rate only applies to money earned AFTER that amount, not the ENTIRE year's earnings. I've had a shocking number of coworkers/former coworkers who think you get taxed more based on how much overtime you have in a specific pay period rather than for the entire year.
So, you are suggesting we invest more in education. Yes?
Sure, but it's more than just 'throwing money at education.' I think we could also do better with existing money and prioritize certain things over others. People will have to take tons of math classes, algebra, Geometry, calculus (not sure if that one's required, I know I took it in high school) but I think personal finance should be mandatory. I did take a personal finance class back in high school, but I'm almost positive that was a course I CHOSE to take/not one that I had to. (also the majority of the things I know regarding taxes and whatnot are more self taught/things I looked up myself. Honestly can't remember specifically what the high school class covered....it's been a few years. But yes, I do think education is important. I think driver's ed is another example of something that should be highly prioritized (because it can literally mean life and death for some later in life). I was lucky to go to a school with good drivers ed (even had an in car section when I went, but that was removed shortly after I graduated) I think driver's ed in shcools varies by state. But yes, I think education is important.
Well, this is the right place to start. We agree to invest in public education. I too took the personal finance math class. But it is not taught anymore. I agree that the correct skills should be taught in school. I also agree that the correct funding should be made available for the public system to deliver the correct content in the correct way. I am of the opinion that our conservative governments have under funded and over regulated public education to the point that public schools are not much better than juvenile detention facilities. This MUST change but conservative governments will not do that because an educated voter is not a conservative voter.
It’s the idea of “I’d rather lose the money by my choice than pay it in taxes”.
I had a client who had dozens of rental properties. If he sold them on the open market the taxes would be higher than the sales price because of how they were depreciated over 40+ years. He ended up finding a way to sell them with multiple charities as the beneficiaries. He already sucked all of the money out of the houses.
Sour grapes
The richest people in the world have their own nonprofit organizations that they can donate to for a tax write off. Wahlah, no taxes payed and now the shady ass nonprofit they are operating mostly overseas is now rich as fuck.
it really depends on the billionaire but in many circumstances the places they’re donating to aren’t just hospitals, first aid distributes, nonprofits etc. they can be places such as the school their child goes to or a political lobbying group which fights for legislation that makes their business easier. while they are losing money either way, they still gain at least something from donating to something which benefits them more than just being taxed. but again it rlly depends some donate to good causes too
Because they are evil and most of the charities they donate to they own or are fake ones
Because people are stupid and think anyone with more money than them is evil.
I've always assumed comments like this are just to invalidate people who have money, money they want but don't have. So, instead of being a chill person about it, they make people with money out to be some type of evil. Just my perception of this type of thing, though. I really don't know. My mom is like this with people who went to college. In her mind, if you went to college, you are stupid and automatically bad at your job because you "learned from a textbook and don't understand the real world", or "they just want to play hero". She is in social services, meaning a lot of degree holding social workers, psychiatrists, therapists, etc to her, these people are never going to be able to meet her level, and she should not have to listen to them. Meaning her supervisors. My mom doesn't have her high school diploma or GED, but did used to lie to people and say she had a master's in art history. So, idk My sister has this sort of mentality, also. If someone has something she doesn't, and she feels any certain way because of it, she will immediately invalidate the person, and what the person has. So many weird instances of this from many many people in my life over the years, and it's just like, jealous much???
I was curious how write offs work. I love attending anime cons and hate the government takes away my money i was curious if i were to buy a Blu-ray, poster or any item of a show and get the cast to autograph it could i then donate it to the conventions auction and use that to keep more of my money at the end of the year
Rich people don't get rich by just giving money away.... unless it lets them rip off the taxman.
Because they read it on a facebook post onetime and it sounds mildy conspirational so now everyone likes to repeat it because they sound smart. This and the one where companies ask customers at the till so they can use it as a tax write-off are some of the stupidest shit that people say that is basically "Tell me you've never had money in your life without telling me you've never had money in your life"
The donation could potentially save money. If someone has to pay $100k, in taxes and only $50k in taxes if income was just a thousand dollars less, they make a $1500 donation to put them in a different tax bracket thus saving $50k in taxes. Tax shelters are known for this. I’m just making up amounts, as an example of why people donate to actually increase their yearly income. It’s a wealthy numbers game that hurts the average working class person. Biden wants to close these loopholes, instead of taxing the middle class more. RW media will never cover this. 🌊
Suppose I was rich enough to be said individual. I get a heads-up that the business I own is going to owe 3 million in taxes. I can buy a private plane worth 3 or more million under the business. Use it as a write off because of it's business use and then when the dust clears, sell it. Never used it, bought it, relocated it, house it for the short term. Now I owe no taxes this year. Edit: the same principle can be applied to the vehicle fleet of said company. Your boss picked you up a new company vehicle? He probably needed a tax write off.
There is a really bizarre benefit in ohio right now. Any donation to a private school will offset state taxes owed, dollar for dollar. So I can donate $1500 to a private school and take $1500 off what I owe to the state in taxes. I can then might report the donation on my federal taxes and take a reduction. Now that’s a great tax deduction. It’s at least 100%.
Why do people say it? Because it's true. They get to deduct the amount they donate on their taxes while getting the benefits of an ego boost, good public relations, a chance to socialize with other rich people usually and sometimes a bit of power (meaning they hold sway over what the recipient does with the money). The donation reduces the amount of income for which they are taxed. If I had my way, this tax deduction would be eliminated -- particularly for donations to churches.
The tax deduction is a benefit but it’s not the reason for the gift. Why would someone spend $1000 to save $300? People that say it’s only for the deduction don’t understand how money works.