The Tax Reform Act and Charitable Giving
Clocking in at 503 pages, the new tax law became effective on January 1, 2018. The provisions relating to individuals are set to expire at the end of 2025. That means that unless Congress acts before then to extend the provisions or make them permanent, in 2026 the current (2017) law would be back in effect. Provisions related to business taxes do not have an expiration date.
What is in the Law that Affects Charitable Giving?
- The charitable deduction will be retained. Some other itemized deductions will be eliminated or subject to limitations. State and local taxes will be deductible only up to a combined annual limit of $10,000. Deductions for mortgage interest will be limited to $750,000 of debt for those married filing jointly.
- The law increased the standard deduction to $12,000 for singles, $24,000 for married couples filing jointly, and $18,000 for heads of households. Your deductions (including your charitable deductions) will not reduce your income tax unless their total exceeds your applicable standard deduction amount.
- There is an increase in the adjusted gross income (AGI) limitation on charitable gifts of cash to public charities from 50% of AGI to 60% of AGI. The AGI limitation on charitable gifts of appreciated property to public charities will remain 30% of AGI. If you itemize, you will continue to be able to carry forward deductions subject to either limitation for up to five years.
- The gift tax, estate tax, and generation skipping tax will continue and estates will still be entitled to an unlimited estate tax deduction for charitable gifts. However, the exemption amounts for each of these taxes will double to $11.2 million per individual, ($22.4 million for gift and estate tax for married couples).
- The law repeals the 80% charitable deduction for gifts made in exchange for college athletic event seating rights.
How will the Tax Reform Act affect you and your charitable giving?
While there will be an increase in the number of individuals claiming the standard deduction, if you live in a state with high income and property taxes and you have a mortgage, you could find that you still itemize and thus can make use of your charitable deductions.
Even if you don’t itemize, here are some strategies to make gifts to charity and still receive tax benefits:
- Make gifts of appreciated property such as publicly-traded securities to charity. The new law will still allow you to make gifts of appreciated assets you have owned for at least one year without triggering capital gain tax. If you itemize your deductions, you will get the double tax benefit of an income tax charitable deduction based on the full value of your appreciated assets in addition to complete capital gain tax avoidance.
- Make gifts to charity using the charitable IRA rollover. If you are over 70½, you can make a direct transfer from your traditional IRA or Roth IRA to charity of up to $100,000. You will avoid all income tax on your withdrawal, even if you don’t itemize after the new law!
- You can make larger gifts to charity. Your total deductions may put you close to the threshold where itemizing your deductions offers greater tax benefits than taking the standard deduction. In this case, you might consider making a larger charitable gift so that you can enjoy the additional tax savings that itemizing would offer.
- Include a gift for charity from your estate. The new tax law retains current law and does not impose limits on estate tax charitable deductions. If you have sufficient assets and may be subject to estate tax, you might consider a gift to charity from your will, trust, or other estate planning documents. Such a gift will reduce your estate tax burden.
- Make a gift to charity from all or a portion of what’s left in your retirement plan. Assets in your IRA, 401(k), or other qualified retirement plan may be subject to income tax when distributed to heirs. Making a charity a beneficiary of a portion or all of your retirement plan will avoid the income tax that might otherwise be due from your heirs. This is an extremely tax efficient way for you to make gifts to charity that costs your heirs less than giving other kinds of assets.
You should always contact your accountant or financial planner to understand how the new tax law will affect your individual tax situation. Do not hesitate to contact Jason Kraiss at 918-232-5131.
What to Expect for Clinic Visits
We understand that visiting any health care facility during this time may cause some concern. That is why we want to assure you of the safe, expert care you will receive. Here is what you can expect when you visit one of our locations.
1. Scheduling Your Appointment
Safety precautions begin before your visit. When scheduling, our team will screen for signs and symptoms of COVID-19 and may offer a virtual visit instead or as part of your follow-up care. If an in-person visit best meets your needs, we will help you prepare for your visit and what to expect when you arrive.
How to Prepare for Your Visit
- Please wear a face covering over your mouth and nose when entering our facilities and during your visit. If you do not have a face covering, we will provide one.
- Limit the number of people who come with you. For clinic visits, our visitor policy generally allows one visitor or support person per patient. Anyone accompanying you must wear a face covering at all times and be symptom-free.
2. When You Arrive
Our staff will welcome you at your designated entrance or check-in desk. To ensure the safety of everyone, you and anyone accompanying you should:
- Let us know if you are ill or if you are currently experiencing any of these symptoms: Fever, body aches, headache, cough, sore throat, runny or stuffy nose, nausea, vomiting, diarrhea, fatigue, new loss of taste or smell, shortness of breath or difficulty breathing.
- Sanitize your hands.
- Wear your face covering over your mouth and nose. Ask for a face mask, if you do not already have one.
- Allow extra time for a health screening when you arrive. At our hospitals, we will take your temperature and ask additional screening questions at each entrance.
3. During Your Visit
Please wear your face covering over your mouth and nose at all times and maintain a safe six-foot distance from others to the greatest extent possible. You may notice extensive safety precautions in waiting areas and other public spaces, including:
- Hand sanitizer stations
- Furniture rearranged or removed to promote social distancing
- Floor markers to guide you in maintaining a safe, six-foot distance from others
- Safety messages posted as a reminder to all
- Magazines, coat racks, beverage stations and other commonly shared items removed
- Enhanced cleaning practices, including frequent disinfecting of high-touch surfaces such as elevator buttons, vending machines and door handles
4. When You Meet With Your Care Team
You can expect thoughtful, expert care in a safe environment.
- To keep everyone safe, our staff and providers are required to get vaccinated unless they qualify for a medical or religious exemption.
- You and your care team will stay masked whenever possible. Patients may be instructed to take off face coverings, if needed to provide care.
- Your care team will wear personal protective equipment.
- Our providers and staff are screened for signs and symptoms of COVID-19 prior to reporting to work to confirm they are well.
- Examination and procedure rooms are thoroughly cleaned and disinfected between every patient using stringent guidelines.
- Froedtert Pharmacy offers many ways to stay safe while getting your prescriptions, including free home delivery, drive-thru and curbside pickup.