The U.S. Senate and House of Representatives have passed their tax bills, which include provisions that will impact businesses and individuals. Congress is currently in the reconciliation process to align each bills’ provisions before both chambers vote for passage. Their stated goal is to have the bill available for presidential signature by Christmas, with most changes taking effect January 1, 2018.
While we wait for the final bill, we know there are currently some commonalities in both versions that will affect future charitable giving. For the benefit of our donors to the Wood River Land Trust, we have compiled information and suggestions to consider*.
Strategies to maximize charitable tax benefits now:
- The existing tax law is in effect for your 2017 taxes. You may be able to use it to mitigate some consequences with respect to 2018 donations.
- The proposed standard deduction threshold (approximately $12,000 individual, $24,000 married filing jointly) will mean some donors cannot itemize their anticipated 2018 charitable gifts on that year’s tax return. Bunching your gifts in 2017 will allow their deductibility on this year’s return.
- Gifts made in 2017 of appreciated stock, mutual funds or bonds (held longer than 12 months) can receive a charitable deduction of the full market value, regardless of how much you paid or when they were acquired. You can still select the security having the lowest basis.
- If you are age 70 and ½ or older and have yet to take your individual retirement account’s required minimum distribution, arranging for the IRA administrator to make a direct distribution to the Wood River Land Trust will lower your 2017 taxable income.
Provisions in the bills related to charitable giving in 2018 through 2025:
- Although the tax break for charitable contributions is one of the few deductions retainedunder both the Senate and House tax bills, other changes would likely reduce its usefulness. Because the standard deduction would be doubled and most other deductions would disappear under proposed reforms, fewer taxpayers will be able to itemize, which is the only way to take advantage of the deduction for charitable contributions.
- The Senate bill also eliminates the specific identification methodavailable to donors who make donations of appreciated securities. Stock investors would be required to divest their oldest shares first regardless of whether those shares come with the lowest cost basis. When gifting stock, not only does the donor get to write off the value of the donation, they also avoid paying tax on any gains.
- There are also differences in the two bills regarding the estate tax deduction; the Senate’s version increases the exemption to $22 million per couple while the House bill eliminates the tax after 2024.
Reminder for 2017 gifts
Actions to make certain charitable gifts (such as stocks or from IRAs) must be initiated in a timely manner for our receipt by December 31, 2017. Donations made by check have to be postmarked on or before December 30, and credit card gifts, which need a day to process, must be arranged by December 29.
Thank you for your loyal support. If you have questions or want additional information on how to make tax-wise contributions “protecting the land we love” contact Courtney Jelaco Phone 208 788 3947; email firstname.lastname@example.org.
* Disclaimer: The Wood River Land Trust is not engaged in rendering tax or legal advice. For counsel or assistance in specific cases, the services of trusted professional advisor(s) should be obtained.