Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
Foundations aren’t deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
My bad, that’s true. I guess it’s that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can’t just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.
Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
You lower your tax burden by as much as the taxes you would have otherwise paid on the money you gave to charity.
If you give 100$ that would have been taxed at 30%, you get a 30$ tax deduction, you’re still down 70$.
Foundations aren’t deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
Foundations are typically 501c3s
My bad, that’s true. I guess it’s that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can’t just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.