The Tax Cuts and Jobs Act of 2017 (TCJA) may impact how we make gifts to charity. And while some rules have changed, there are still many tax-efficient ways to support SUNY Potsdam students. Below is a review of what has and what has not changed, and how you can still support Potsdam in tax-advantaged ways.
What TCJA changes and does not change
- Personal exemptions are eliminated and the standard deduction for 2019 is now $12,200 for singles and $24,400 for married couples filing jointly. This may result in many taxpayers no longer itemizing each year. While this may pose a challenge for charitable giving, the strategies outlined below may help you continue and expand the impact of your giving.
- The annual deductible ceiling for cash gifts was raised from 50% to 60% of adjusted gross income (AGI). The 30% AGI limit for gifts of appreciated property held long term remains at 30%. The carryforward rules remain unchanged.
- You may still make gifts of appreciated stock held long term and not declare any of the capital gain while garnering a possible income tax deduction for the full fair market value of the stock.
- The Pease Limitation that phased out the benefits of charitable deductions for higher income taxpayers was repealed.
- Income tax brackets have been lowered, and many taxpayers may find they have increased discretionary income to give to charity.
- The qualified charitable distribution (QCD) rules do not change. Individuals 70½ and older may still roll over gifts up to $100,000 from their IRAs directly to Potsdam without paying tax on those transfers.
- Estate tax exemption levels for 2019 have risen to $11.4 million for individuals and $22.8 million for couples. Wealthier individuals may find they have increased assets in their estate to give to charity.
- The rules for creating charitable gift annuities and charitable remainder trusts do not change. Generally, these plans provide lifetime income in exchange for a gift to Potsdam.
How you can continue to make tax-efficient gifts to charity
- If you are 70½ or older, consider gifts directly from your IRA (known as a “QCD,” or “IRA Charitable Rollover”). The distributions count toward your annual required minimum distribution (RMD) but you do not pay tax on them as income, in effect, the same benefit as an income tax deduction.
- Make gifts of appreciated stock held long term and then repurchase the stock at a new, higher cost basis with the cash you otherwise would have donated.
- Consider gifting non-cash appreciated assets such as real estate. You may still enjoy a full fair market income tax charitable deduction and avoid declaring any capital gain. A gift of a life estate allows a partial tax deduction while allowing you to remain in your home as long as you wish.
- You may have increased discretionary income to give to charity because you are in a lower tax bracket. If you pay off your balance each month, make your gift using a credit card that accrues points or other benefits.
- Gifts that pay you lifetime income (charitable annuities and charitable trusts) may generate a partial income tax deduction, save on capital gains tax, increase income from low-yielding assets and generate some tax-free income.
- If you no longer itemize each year, consider bundling your gifts to itemize every other year. For example, gifts to SUNY Potsdam in January and July allow donor recognition for two fiscal years at Potsdam but one calendar year for income tax purposes.
- Gifts to a donor-advised fund allow you to generate an income tax deduction in one year and then request grants to charity from the fund in subsequent years.
- You may wish to review your existing pledge agreements so you might bundle your pledge payments into years that you itemize. In addition, you may wish to consider which years you itemize when you create new gift pledges.
- You may wish to review your estate plans in light of the increased estate tax exemption. Many individuals may find increased flexibility to plan larger gifts during life to reap income tax benefits.
- Those who inherit a retirement plan must pay income tax on distributions from the plan. You may want to plan gifts to SUNY Potsdam from your retirement plan (Potsdam pays no income tax on the gift) and then pass other, non-taxable, assets to heirs.
We make gifts to SUNY Potsdam to make a Potsdam education possible for its students. The new tax environment will continue familiar ways and offer new opportunities for you to make your gifts in a tax-efficient manner.
Contact us for help as you consider your charitable planning. Go online for help planning your gifts, or contact:
Jason Ladouceur, Senior Director of College Advancement
Potsdam College Foundation
44 Pierrepont Ave., Potsdam, NY 13676
The IRA Charitable Rollover is a tax-efficient way to make gifts to Potsdam. Learn more here.
You can also go online for more year-end giving ideas.
The Raymond Legacy Society celebrates those who have made an estate gift arrangement to support the College, as well as those who have established a permanent endowed fund. The Society also provides educational material on giving to assist alumni and friends in achieving their philanthropic goals. For more information, visit potsdam.edu/legacy.
Disclaimer: This information does not provide legal, tax or financial advice. You should consult your legal and financial advisors before planning or making any gift to charity. (rev. 11/18)