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Important Tax Update
Update on Tax Laws in the USA | Expand Charitable Gift Options
According to the Sharpe Group, in December 20I7. Congress passed the Tax Cuts and Jobs Act. the most comprehensive tax law revisions package in more than 30 years.
The great news for non-profit agencies. including World in Need International and it’s affiliated missionaries, is that charitable deductions improved and expanded its benefits for many donors.
1. The new tax law expands the gift amount limit you can make as a charitable donation. Gifts of cash could eliminate tax on 60% of one’s adjusted gross income (AGI) each year instead of 50%.
2. In addition. any amounts not deductible in one year can be used to reduce your income taxes in up to five additional years.
3. Another significant tax change with the new law was the repeal of the provision that required some higher income taxpayers to reduce their itemized deductions by a certain percentage of their income.
Depending on one’s financial situation. this provision caused some donors to lose up to 80% of the value of their deductions. Going forward. the removal of this provision will allow those donors to enjoy the full value of their deductions.
3. The new law retained the special tax benefits that come with giving gifts of appreciated assets including securities such as stocks and mutual funds. If you have owned the securities more than one year, you may still claim a deduction for their full market value. not just the original market value when purchased.
4. In addition, you do not have to pay capital gains tax if the security is donated directly to a charity. Gifts of appreciated securities may be deducted and eliminate tax on up to 30% of one AGI. As with cash gifts, you can claim any excess deduction for up to five future years.
5. One may also make charitable gifts that will be received in the future as part of your will and estate plans. The new legislation allows for even fewer estates to be subject to estate tax.
The amount that can be left to heirs free of federal estate and gift taxes has been increased to approximately $1.2 million for single individuals and $22.4 million for married couples.
This means it may now be more practical to use all or a portion of one's tax savings to fund charitable gifts as part of your will and estate plans. because your heirs will receive the same amount of money. or more than they would after paying taxes under the prior law.
As always, consult a tax advisor to learn more about how to maximize your charitable gifts and for professional estate and will planning.
For more information on how to donate gifts to World in Need please contact us today at.…