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2018 Tax Reform: Are You Prepared for the End of the Year?

December 11, 2018

With the introduction of new tax laws this year, you may wonder how these new regulations will affect you. For many taxpayers, the new tax law creates an opportunity for charitable giving in the form of increased disposable income, even though the deduction for charitable contributions may be less available.


What’s New?

Income Tax Brackets

Whether you’re a single filer or a married person who files jointly, separately, or as head of household, you will likely fall into a new tax bracket. You may be in a lower bracket this year and pay less federal tax, which may afford you an opportunity to give more to the charitable organizations you care about, such as Trinity Church.

Higher Standard Deductions

The new law nearly doubles the standard deduction, resulting in fewer persons itemizing their tax deductions. The charitable contribution deduction, however, is only available for itemizers.  To take advantage of the charitable contribution deduction, you may now have an incentive to bunch your gifts to Trinity into one particular year such that your itemized deductions for that year exceed the standard deduction.

Charitable Contributions for Cash Gifts

The new law increases the limit of your adjusted gross income for donations of cash gifts up to 60% (increased from 50%). Higher net worth donors may want to consider increasing cash gifts.

Estate Tax Exemption

The threshold for triggering an estate, gift, or generation-skipping tax was raised to $11.18 million per person ($22.36 million for a married couple). If you have a high net worth, you may no longer anticipate being subject to estate tax and have an incentive to make larger gifts during your lifetime to obtain an income tax charitable deduction instead of waiting until after your lifetime.


What’s the Same?

Charitable Deductions

You will still be able to deduct your charitable contributions if you itemize your taxes.

Charitable Contributions of Appreciated Property

The limitation on charitable gifts of certain long-term appreciated property to charities such as Trinity Church will remain at 30% of your adjusted gross income. You can still carry over any excess for up to five additional years.


What Does This Mean for Me?

The lower tax brackets may mean that you are likely in a better financial position to help others this year, even if you claim the standard deduction and do not take advantage of the charitable contribution deduction. Here are three smart ways to be charitable as we close out the year:

1. Donate appreciated property.

With many markets experiencing strong growth, consider a gift of appreciated property to Trinity Church. If you itemize your deduction, you may qualify for an income tax charitable deduction and avoid capital gains tax that would result if you sold the property yourself.

2. Name Trinity Church as a beneficiary of your retirement plan accounts.

Assets in your IRA, 401(k) or other qualified retirement plan accounts remain subject to income tax when distributed to your heirs. If you name Trinity as a beneficiary of all or part of your plan, your gift will pass to Trinity tax-free.

3. Give from your IRA (if you are 70½ or older) through a charitable rollover.

A direct payment from your IRA to a charity such as Trinity may qualify as a charitable rollover that, helps you fulfill your required minimum distribution and is not considered taxable income to you.


Have Questions?

This information is not meant to be formal tax advice, and as always, you should check with a tax professional or financial planner to help find the best solution for your unique situation. If you have questions about giving to Trinity, please contact Adam Dawkins, Director of Welcome & Stewardship, at 617-536-0944 or adawkins@trinitychurchboston.org. We will be happy discuss how you can include your support of Trinity Church as part of your plans.