<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=314834185700910&amp;ev=PageView&amp;noscript=1">

Year-End Idea #5: Charitable Giving for Caterpillar Employees


We pause to express gratitude for our bounties and the people in our lives, as the holiday season and the end of the year approach. It is also a time when charitable donations are frequently contemplated. The tax benefits associated with charitable giving may increase your propensity to donate. We recommend that all able-bodied Caterpillar employees and retirees include this in their year-end tax planning.

According to a recent study by Fidelity Charitable, 60% of individuals aged 65 and older said they plan to donate to charity during retirement, with the average amount of their charitable giving expected to be around $6,500 per year. This suggests that charitable giving is an important consideration for individuals as they approach retirement and can be a meaningful way for them to give back to causes they care about.


Tax deduction for charitable gifts

Generally, if you itemize deductions on your federal income tax return, you can deduct charitable contributions. This may also help you increase your donation.

Example(s): Assume you wish to make a $1,000 charitable donation. One method to potentially increase the value of the gift is to add the amount of any income taxes saved through the charitable deduction. You might be able to give $1,316 to charity at a 24% tax rate [$1,000 (1 - 24%) = $1,316; $1,316 x 24% = $316 in tax savings]. Alternatively, at a tax rate of 32%, you may be able to donate $1,471 to charity [$1,000 (1 - 32%) = $1,471; $1,471 x 32% = $471 in taxes saved].

However, Caterpillar employees and retirees may want to recognize that their deduction may be limited to a certain percentage of their adjusted gross income (AGI). For instance, your deduction for cash gifts to public charities is generally limited to 60% of your AGI for the year, whereas other gifts to charity are typically limited to 30% or 20% of your AGI. Generally, charitable deductions in excess of the AGI limitations may be carried forward and deducted over the subsequent five years, subject to the income percentage limitations applicable to those years.

For charitable donations made in 2022, the normal rules apply: The limit for direct cash donations to public charities is 60% of AGI. Even if you do not itemize deductions, you can receive a $400 charitable deduction for direct cash donations to public charities beginning in 2021.

Ensure you keep proper documentation of your charitable donation. To claim a charitable deduction for any contribution of cash, a check, or other monetary gifts, you must maintain a record of such contributions in the form of a bank record (such as a canceled check, a bank or credit union statement, or a credit card statement) or a written communication (such as a receipt or letter) from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. If you claim a deduction for a charitable contribution of $250 or more, you must provide a contemporaneous written acknowledgment of the contribution from the charity. There are additional requirements if you make non-cash contributions.

Year-end tax planning
When making charitable contributions at the end of the year, employees and retirees of Caterpillar should factor them into their year-end tax planning. Typically, you have some influence over the timetable of your income and expenses. In general, you should time the recognition of your income so that it is taxed at the lowest possible rate, and you should time the recognition of your deductible expenses so that they can be claimed in years when you are in a higher tax bracket.

Featured Video

Articles you may find interesting:

Loading...


For instance, if you expect to be in a higher tax bracket the following year, it may make sense to delay making the charitable contribution until January so that you can claim the deduction the following year, when it will provide a greater tax benefit. Alternately, you could transfer the charitable contribution and other deductions to a year in which your itemized deductions exceed the standard deduction. And if the aforementioned income percentage limits are a concern in a given year, you may want to consider shifting income into that year or shifting deductions out of that year so that a larger charitable deduction is available for that year. A tax expert can assist you in evaluating your individual tax situation.

A word of caution
Employees and retirees of Caterpillar should consider only dealing with reputable charities and avoiding those with similar-sounding names. It is common for fraudsters to pose as charities using phony websites, emails, phone calls, social media, and in-person solicitations. Using the Tax-Exempt Organization Search tool on the IRS's website, irs.gov, research the charity. Don't send cash; use a check or credit card instead.

Conclusion

Charitable giving is like planting a tree. Just as a tree grows over time, your charitable donations can also grow and have a lasting impact. The benefits of charitable giving can be seen in the immediate impact on the recipient organization, as well as in the long-term benefits that can come from continued support. Just as a tree provides shade, clean air, and a habitat for wildlife, charitable giving can provide benefits to those in need, as well as to the community as a whole. And like a tree, your charitable contributions can continue to grow and bear fruit long after they are made, leaving a positive legacy for future generations.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
Caterpillar’s defined benefit pension plan, known as the Caterpillar Retirement Income Plan, vests employees after five years. The plan calculates benefits based on final average salary and years of service. Caterpillar also offers the Caterpillar 401(k) Savings Plan, automatically enrolling new employees with a 6% contribution rate, matched up to 6%. The plan includes both traditional and Roth options, with immediate 100% vesting for all contributions. [Source: Caterpillar Benefits Guide, 2022, p. 18]
Restructuring and Layoffs: Caterpillar has announced significant restructuring efforts that could result in cutting 880 jobs, primarily aimed at improving profitability and operational efficiency. This aligns with ongoing efforts to adapt to changing market conditions and maintain shareholder value (Sources: Yahoo Finance, Fox Business). Union Contract Deal: In a positive development, Caterpillar reached a tentative agreement with the union representing workers at four facilities, avoiding a potential strike. The new contract addresses demands for higher wages, improved safety measures, and better healthcare benefits (Source: Fox Business). Financial Performance: In Q1 2024, Caterpillar reported a profit per share of $5.75, reflecting robust financial health despite lower sales volumes (Source: Caterpillar).
Caterpillar offers stock options and RSUs to align employee interests with company goals. Stock options are granted with a predetermined price and vesting period, while RSUs vest over a few years based on performance or tenure. In 2022, Caterpillar enhanced its equity programs, emphasizing performance-based RSUs. The trend continued in 2023 and 2024, with broader RSU availability and performance-linked stock options. Executives and middle management are the primary recipients, fostering long-term alignment with company performance. [Source: Caterpillar Annual Reports 2022-2024, p. 66]
Caterpillar updated its healthcare benefits in 2022 with enhanced mental health resources and preventive care services. The company continued to expand its offerings in 2023 with new telemedicine options and wellness initiatives. By 2024, Caterpillar’s strategy emphasized integrating new technologies and maintaining robust benefits. The focus was on providing comprehensive support and addressing employee health needs. Caterpillar aimed to improve overall well-being with innovative health management solutions. Their approach reflected a commitment to effective healthcare coverage and employee satisfaction.
New call-to-action

For more information you can reach the plan administrator for Caterpillar at 510 lake cook rd Deerfield, IL 60015; or by calling them at 224-551-400.

https://cache.hacontent.com/ybr/R516/02358_ybr_ybrfndt/downloads/UAW_SPD.pdf - Page 7, https://www.mycatpension.co.uk/uploads/documents/00/00/01/71/documentdocument_file/caterpillar-db-newsletter-2024.pdf - Page 9, https://benefits.cat.com/content/dam/benefits/PDF%20Documents/2023-ae/HR-Benefits_Enrollment-2023-Employee-web_FINAL.pdf - Page 12, https://benefits.cat.com/content/dam/benefits/PDF%20Documents/HR-BenefitsEnrollment-2022-Retiree-Final-111621-LR.pdf - Page 14, https://www.mycatpension.co.uk/uploads/documents/00/00/01/47/documentdocument_file/caterpillar-db-newsletter-2023.pdf - Page 16, https://www.mycatpension.co.uk/Uploads/Documents/00/00/01/72/DocumentDocument_FILE/Caterpillar-DC-newsletter-2024.pdf - Page 20, https://cache.hacontent.com/ybr/R516/02358_ybr_ybrfndt/downloads/RIP_AFN.pdf - Page 11, https://s25.q4cdn.com/358376879/files/doc_presentations/2024/2023-Caterpillar-Investor-Presentation.pdf - Page 18, https://www.mycatpension.co.uk/Uploads/Documents/00/00/01/69/DocumentDocument_FILE/Caterpillar-DC-Pension-Plan-2023-Chair-s-Statement.pdf - Page 22, https://cache.hacontent.com/ybr/R516/02358_ybr_ybrfndt/downloads/SPDDB2VR.pdf - Page 24

*Please see disclaimer for more information