New Provisions & Strategies for Charitable Giving in 2018
Last month, with the new tax law having just passed, we emailed you with the idea that your clients use a donor advised fund to “group” 2-3 years worth of charitable giving in to one year. Grouping 2-3 years’ of gifts in to one year could help their itemized deductions exceed the new $24,000 standard deduction in that year, giving them the maximum tax advantage. Then in years 2 and 3, they use the standard deduction. This strategy may make their total deduction over that period of time greater than it would have been otherwise. Their donor advised fund stays local and supports all of their favorite charitable causes, helping them continue their annual giving in a more strategic and advantageous way. If you missed that article you can read it and see an example of how it would work by clicking here.
This month our friends at R&R Newkirk shared an article on our Advisor Resource Website that we thought could be beneficial to you and your clients. The article New Provisions and Strategies for Charitable Giving 2018 is provided as a resource for you below along with other gift planning tips.
With all these new changes your clients may be feeling a little overwhelmed. We’re working with our clients to let them know they can continue to maximize the tax benefits of their giving, they just need to think about new ways to do it. If I can help you and your clients, please let me know by calling (812) 948-4662. It doesn’t matter which side of the river they call home – establishing their donor advised fund at CFSI to group their charitable gifts can be done quickly, easily, and they’ll be able support any nonprofit organization they choose – no matter where they are located.
Linda S. Speed, JD
President and CEO
The Community Foundation of Southern Indiana does not give tax advice and recommends that individuals speak with their professional advisor about their unique circumstances.
New Provisions and Strategies for Charitable Giving in 2018
The Tax Cuts and Jobs Act, signed into law on December 22nd, includes several changes that will affect charitable giving. Among these are:
- The gift, estate and generation-skipping tax credits will shelter gifts and estates up to $11.2 million (adjusted for inflation).
- The deduction limit for cash gifts to charity is increased from 50% of AGI to 60%.
- The 80% charitable deduction allowed for payments for the right to purchase tickets to athletic events at colleges and universities is repealed.
Here are some charitable giving strategies to consider:
- Qualified charitable distributions (QCDs) from IRAs are advantageous for eligible donors. Although no charitable deduction is available, the income tax that is normally owed on withdrawals is avoided. In addition, because QCDs can satisfy required minimum distributions, income tax savings can be realized. QCD rules:
- Donors must be at least age 70½ on the date of the gift.
- QCDs can come only from IRAs, not 401(k)s or other retirement accounts.
- A maximum of $100,000 may be given annually.
- The transfer must come directly from the IRA custodian.
- QCDs can be made only to public charities, not to private foundations or donor advised funds.
- Distributions can be used to satisfy a donor’s pledge.
- Life-income gifts such as charitable remainder trusts and charitable gift annuities offer several advantages to satisfy philanthropic goals. Because deductions for remainder trusts and gift annuities tend to be larger, donors may be able to itemize in the year a gift is arranged. Payments from life-income gifts may be attractive to donors who would normally make bequests to charity through a will or living trust, providing income tax, and possibly capital gains tax, savings.
- Making gifts of highly appreciated assets allows donors to avoid the capital gains tax that would be due if the assets were sold, offering tax savings even if the taxpayer uses the standard deduction.
- Those with donor advised funds can direct gifts to public charities. A donor may be able to itemize by making a larger gift to a donor advised fund, from which annual gifts can be made over several years. Contributing appreciated securities to a donor advised fund provides added tax savings.
Content courtesy of R&R Newkirk.
Monthly Gift Planning Tips
Valuable Resources for You and Your Clients
Exceeding the $12,000/$24,000 Standard Deduction
It’s estimated that only about 5% of taxpayers will itemize their deductions starting in 2018 under The Tax Cuts and Jobs Act . . . more
Businesses of All Types Are Winners
The graduated rates applicable to C corporations prior to 2018 have been replaced by a flat 21% rate, but those aren’t the only businesses benefitting from The Tax Cuts and Jobs Act . . . more
Changes Affecting Charities and Charitable Giving
Although the charitable deduction remains intact – and even enhanced slightly with the deduction limit for cash gifts to public charities increasing from 50% to 60% of adjusted gross income – fewer taxpayers overall are expected to itemize in the coming years . . . more
Charity in Lieu of Alimony?
Beginning with divorce or separation agreements executed after 2018, alimony will no longer be deductible by the paying spouse and recognized as income by the receiving spouse . . . more
Content courtesy of R&R Newkirk.