Could I screw myself with my own money?

November 28, 2006 4:19 PM

I've got $20,000 coming to me, and this may possibly be a bad thing. Mature Bonds vs. Charity filter...

I currently receive medication every few weeks through an IV. This lovely, lifesaving drug is a couple of grand a pop. I would never be able to afford it, even the lower copay through my insurance, except that the clinic I where I get it gives it to me for free and takes it as a tax write-off.

I have a $20,000 bond that just matured. I'd like to cash it, use about 4 grand to pay remaining student loan and credit card debt, and put the rest back in CDs or somesuch thing.

Here's the question:

If I cash this bond, will it affect my status with the clinic? Could I lose my "charity" status?

posted by josingsinthehall to work & money (9 comments total)

Possibly stupid question with probably glaringly obvious answer: if you don't tell the clinic about this, how will they find out?
posted by enrevanche at 4:26 PM on November 28, 2006

I don't know, I'm not very good at this, but the we did have to go through a bunch of hoops with the clinic to get my charity status, including tax returns. I assume that the government will make a note that I'm "cheating" (even though allll that money wouldn't even last four treatments).
posted by josingsinthehall at 4:29 PM on November 28, 2006

It completeley depends on the charity's policy. Is it based on income alone or income and assets? And what are the income and asset levels? Do you have to requalify on a yearly basis, and when is the next date that you'd have to give them info?

If it's based on tax forms, will this cash out be on your 2006 return somewhere, and when would you have to show it to them? By the time you'd need to requalify, will you be in a stronger financial position or with different insurance, so you won't need them anymore?

Read all the fine print and good luck.
posted by saffry at 4:44 PM on November 28, 2006

Did they know you had that bond back when you were jumping through the hoops? Because you're really no better off now than you were back then, unless someone gave you the bond in the meantime. You'll have to show some interest income on your tax return, but again, unless this is a gift, you won't have a gain of $20,000 to report.
posted by jaysus chris at 4:46 PM on November 28, 2006

When a bond matures, you aren't receiving income. You're converting an asset from one form into another (cash).

Only the coupons or dividends are considered income.

And a gift from another person, bought with after-tax dollars, is not taxable.
posted by randomstriker at 4:52 PM on November 28, 2006

Can you clarify whether you had the bond when you gained your charity status? The maturing of the bond hasn't made you any richer, just more liquid.
posted by winston at 4:59 PM on November 28, 2006

And a gift from another person, bought with after-tax dollars, is not taxable.

Not true. A gift below the gift threshold (around $12k or $13k these days) does not have to be reported and therefore is implicitly nontaxable. Above the threshold, the gift must be reported and tax must be paid.



Don't listen to us, check with the accountant who helped you through the process or who prepares your tax returns.
posted by b1tr0t at 5:58 PM on November 28, 2006

I've had the bond from well before the onset of my disease, but I don't know whether it was puchased with after-tax funds. This is also the first year I've had the charity help, so I don't know whether I have to apply yearly (I think so). I guess I need to find out a lot more information.


Thanks for all your help so far, you guys (and I'll take more if you've got it). At least I know where to start. *sigh*
posted by josingsinthehall at 5:59 PM on November 28, 2006

Your basic plan seems sound, and should be the rule for anyone who suddenly comes into a lot of money when they were previously poor: pay off debts and sit on the rest while you figure out your next move at your own pace.
posted by Burhanistan at 6:07 PM on November 28, 2006