Charitable Donations: Overview
You can plan for cash, assets, and insurance donations and apply the associated tax credit to your projections.
The following steps detail how to set up the charitable donations and go into more detail on how the donations affect your projections.
In this article:
Enable Charitable Donations
Select Scenario Setup -> Settings -> Advanced.
Check the box to Enable Charitable Donations and save your settings.
Enabling charitable donations will automatically check the box to enable ACB for this scenario. This means that the Capital Assets table under the Assets page will have an additional column for the Cost of the accounts.
Enter unclaimed Charitable Donations
Select Scenario Setup -> Settings --> Charitable Donations. On this page, you can enter any unclaimed donation amounts from the previous 5 years. Snap will claim them during the projections where it is appropriate.
Enter the Charitable Donations on the planning page
The Charitable Donations columns appear next to the Income section on the Planning page.
The Claimed Amount column shows the amount that is being claimed for tax purposes each year. Note that this amount will be the minimum of the following:
- total donations
- 75% of taxable income (or 100% of taxable income + estate tax in their final year)
- just enough to zero out either the federal or provincial tax
The Unclaimed Amount column shows the total unclaimed amount being carried forward from previous years. Note that any unclaimed amount can be carried forward for 5 years. If there are unclaimed amounts to be claimed, Snap will always claim the ones with the closest expiration date first (i.e. with $2,000 expiring in 2020, and $4,000 expiring in 2022, Snap will deplete the 2020 amounts first before dipping into the 2022 amount.)
If you hover your mouse cursor on top of the value in the Unclaimed Amount column you will see detail on when the unclaimed amounts will expire.
View the Charitable Donations Details
From the individual's Planning page, click the blue icon at the top of the Charitable Donations column. (The Combined page does not display the Charitable Donations column.)
Here is the Charitable Donations Details table for John. To export this table to Excel, you can click the Excel icon pictured below.
John's Charitable Donations Details table
This table will look different for each spouse.
Charitable Donation Tax Credit
Under this section, you can see the federal, provincial and total tax credits generated based on the donation amount being claimed. Keep in mind that this table is generated per spouse.
This section shows the taxes paid each year for this person and also displays what the taxes would have been if the donation was not made.
John's table (above) provides information about the claimed amounts for his taxes. He is able to claim donations that he made ( From John) and no donations that Jane made (From Jane). (You will know which spouse the table has been generated for based on the first name listed under the Claimed Amounts section. John's table shows From John first under the Claimed Amounts.)
On Jane's Charitable Donations table, you can see the amount of donations that she claims for her taxes. She is claiming donations that John made since he would have no additional benefit if he made the claim himself (From John) below.
Jane's Charitable Donations Details table
On Jane's Planning page, you can see that she has made Cash donations herself, but she does not have a Claimed Amount until it makes sense to do so. John has claimed her donations in the years where she does not.
On John's Planning page, he is shown to claim more than he donated in the first year due to the unclaimed amounts of $6,000 and claiming Jane's $2,000 Cash donation. The unclaimed amount is what is left over after both spouses have made their claim. It is tracked and claimed in a future year if possible.
Charitable Donations in the Report
In the report, the cash donations will be treated as Other Expenses under the Cash Flow Summary. There is no separate Charitable Donations section. As shown above, you can export the Charitable Donations Details table if desired.
The Final Year of Projections
In the final projection year, the client can claim up to 100% of their taxable income. The software will display a claimed amount that will bring federal and provincial taxes to $0.
In this final year, the total income used for cash donation purposes is the taxable income (i.e. the income being generated via employment and/or other income and/or withdrawals from assets) plus the deemed disposition of the assets. In other words, for the final year of the projections, the total tax credit that is calculated is based on the total tax plus the estate tax.
Note: If one spouse's projections end before the other spouse's projections there is currently no rollover of unclaimed amounts of cash donations to the surviving spouse. This will be updated in a future release of the software.