If you are considering a charitable gift this year, you may consider contributions of cash, appreciated stock, or other assets directly to the Foundation for Lincoln Public Schools. You may also consider more sophisticated gifting tools, such as charitable gift annuities or charitable lead trusts. If in addition or instead you prefer a deferred gift to the Foundation, you may include your charitable intent in your estate plan documents, such as a bequest in your Will of a certain dollar amount or percentage of your estate, and / or naming the Foundation as a beneficiary on your retirement accounts, life insurance, or other accounts or assets.
Before the enactment of the Tax Cuts and Jobs Act of 2017, an individual was eligible for a deduction for cash charitable contributions totaling up to an amount of 50% of their adjusted gross income. With recent reform, the new tax code has increased that limit to 60% (effective for taxable years beginning after December 31, 2017 and expiring for taxable years after December 31, 2025), meaning you may be eligible for an even larger charitable deduction for greater giving.
Contributing appreciated stock continues to serve as an extremely useful tax strategy with planned giving. By gifting appreciated stock, you are not only able to take advantage of deducting the amount of the charitable donation reducing your overall income tax liability, but you are also able to escape the unrealized capital gains on the donated property. All in all, this results in a larger donation, maximizing your charitable dollars.
It is also important to consider other forms of gifting like a qualified charitable distribution (“QCD”), which has been in and out of the tax code since 2006 but only codified as a permanent law by the Protecting Americans from Tax Hikes Act of 2015. QCDs permit donors to direct distributions from their Individual Retirement Accounts (“IRAs”) to charities in a tax advantageous manner. Specifically, a QCD permits individuals who’ve attained the age of 70 ½ to make annual transfers to a qualified charity totaling up to $100,000 of tax-deferred IRA dollars. QCDs offer many advantages. First, the distribution goes towards the satisfaction of an individual’s required minimum distribution. Second, such distribution is excluded from the taxpayer’s income. Because fewer individuals are expected to itemize as a result of the new tax bill, a QCD is a useful tool to consider in your annual charitable planning, while still providing an income tax benefit.
You should consult with your estate planning attorney, tax advisor, and planned giving officer in order to formulate the best and most efficient method to carry out your charitable intent. You may contact your planned giving officer at the Foundation for Lincoln Public Schools at 402.436.1612 for further information.
Kara E. Brostrom, Esq.
Christina L. Ball, Esq.
Baylor Evnen, LP
1248 “O” Street, Suite 600
Lincoln, NE 68508