Charitable Giving

Here’s How to Donate to Loved Ones and Avoid a Tax Bite

Published on: February 8, 2019 | By McCulloch & Miller, PLLC

While there’s a time limit on this great opportunity for tax-free giving—2025, unless Congress makes some changes—this is a good time to take advantage of minimizing your tax liability through generosity. There’s a new big break for top-dollar wealth transfers, thanks to the new tax law.

Basic rule: the more you give away, the smaller your estate and, therefore, the smaller your tax liability. If you’ve got a lot of wealth, this is a good time for you and those you want to make gifts to. The sooner you exploit this, the more you can give. It means that there’s less of a chance your estate will have to write a check to the IRS.

The Street’s recent article, “This Is the Golden Age of Tax-Free Gift Giving,” says the federal government has taxed estates since 1924, and as recently as 2001, the threshold when taxes kicked in was $675,000. This exemption level from taxation has been increased ever since. However, a large increase came from the Tax Cuts and Jobs Act, which took effect in 2018. The Act doubled the exemption level and indexed it to inflation. Anything above the new limits is taxed at 40%. It is $11.4 million for singles and $22.8 million for married couples in 2019.

How to Make Your Charitable Giving Have a Greater Impact

Published on: February 1, 2019 | By McCulloch & Miller, PLLC

Most donations are made in December, and charities of all shapes and sizes make the most of the holiday spirit. However, by taking a bit of time to plan out charitable giving, including doing some research and talking with your family about your legacy, your giving could have a greater impact this year and in years to come.

A rough ride in the start of the year’s markets and changes to the tax laws have left many donors wondering if they can afford to be as generous in 2019, as they were in the past. Fundraisers advise donors to think more about what non-profits have greater meaning to them and to take a more thoughtful approach to giving. Philanthropy is still good for your legacy, sense of community and, when done right, taxes.

The Reno Gazette Journal’s article, “Get an early jump on charitable giving” looks at tax planning opportunities for charitable giving, specifically in light of the Tax Cuts and Jobs Act and Qualified Charitable Distributions (QCD). Here’s a review of why people give. The primary reasons for donating include the following:

What Singles Need to Know About the Tax Cuts and Jobs Act

Published on: January 3, 2019 | By McCulloch & Miller, PLLC

Single with a net worth less than $11.4 million in 2019? You’re in luck—you can die knowing that all of your money will pass free of any federal estate tax to your heirs.

It was good news for the wealthy—the Tax Cuts and Jobs Act (TCJA) amped up the unified federal estate and gift tax exemption to $11.4 million for 2019 (and up to $11.18 million in 2018). If that wasn’t generous enough, those exemptions will be increased annually for inflation from 2020 to 2025. As comedian Mel Brooks would say, “It’s good to be the king.”

MarketWatch’s recent article, “How single folks should handle estate-tax planning under the new tax law,” explains that taxable estates above the exemption will have the excess taxed at a flat 40% rate. An individual’s cumulative lifetime taxable gifts in excess of the exemption are taxed at the 40% rate. Likewise, taxable gifts are those that are more than the annual federal gift tax exclusion of $15,000 for 2018 and 2019.

What You Need to Know About Charitable Giving

Published on: May 22, 2018 | By McCulloch & Miller, PLLC

Even with the new tax laws in place, there are still advantages to philanthropy, at all levels of giving.

There are many ways to support causes that matter to you. Some charitable giving can be incorporated into your estate plan, according to Investopedia’s article, “A Primer on Philanthropic Vehicles.” However, some people enjoy giving while they are living, to have control over their generosity and enjoy the positive impact their giving has on others.

Cash is the most basic donation and is one that most people know about. That’s as simple as writing a check to the charity or other tax-qualified organization of your choosing.

Can You Make Charitable Donations from Retirement Accounts Without Triggering Taxes?

Published on: November 16, 2017 | By McCulloch & Miller, PLLC

If you roll the money over to an IRA first, you can donate funds from your 401(k) Required Minimum Distribution tax free. Be very careful to follow the rules, so that you don’t create a tax or penalty problem.

First, let’s define the RMD (Required Minimum Distributions). This is the least amount of money that someone who owns a retirement plan is required to withdraw every year, starting the year that the individual turns 70½, or, if they retire later, the year when they retire.

However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs have to start once the account holder is age 70 ½—even if she’s not retired. The rules of what can and cannot be done with retirement plans are very strict, so you may need help from a professional.

More Changes Coming to Medicare in 2018

Published on: August 10, 2017 | By McCulloch & Miller, PLLC

Higher fees are coming to high earners, when income thresholds for the highest surcharge tiers drop even further next year.

If you were hit with premium surcharges for Medicare Part B and Part D already, these costs will increase again in 2018, according to a recent article in Kiplinger, “Medicare Surcharge Thresholds to Drop.”

This recalibration of the trigger points was a part of the Medicare Access and CHIP Reauthorization Act of 2015, also called the "Doc Fix" law, which ended the annual battles over fee schedules for doctors' Medicare payments. To help pay for the permanent fix, lawmakers have asked high-income beneficiaries to foot the bill.

Create a Legacy Based on What Matters to You

Published on: July 5, 2016 | By McCulloch & Miller, PLLC

Whether your love is animal rights or protecting the planet, a trust donation creates a legacy that reflects your values and supports the future.

A woman’s love for animals was reflected in a significant trust donation given to the Little Rock Zoo, as reported in The Northwest Arkansas Democrat Gazette article, “Animal lover leaves Little Rock Zoo nearly $3M, biggest gift ever.” A trust created an endowment fund, the Jayne and Fletcher Jackson Foundation, which will fund many programs at the zoo for years to come.

"Animals are what made her happy,” a zoo representative commented. “It was no surprise after we got to know her that the zoo was what she wanted to leave her estate to upon her passing."

What’s the Point of Dying Rich? Help Your Houston Family Enjoy Wealth

Published on: February 5, 2016 | By McCulloch & Miller, PLLC

Make no mistake. Estate planning is, and should be, a serious business, along with financial planning and wealth management, notes The Wilmington Business Journal. These are all on-going activities and part of a well-managed, successful life, at any age or stage.

In its article "Do You Really Want To Leave a Large Inheritance?" the Journal advises seniors that having enough retirement funds is critical. But what about this other school of financial planning: Don't Die Rich!

The "Don't Die Rich!" philosophy is based on the premise that money is best used while you are around to enjoy it and appreciate the benefits. Due to lengthening life spans, in many cases, parental assets aren't going to be around to be inherited by children until those children are near retirement age.

Houston Families Can Explore Advantages of Charitable Giving

Published on: March 31, 2015 | By McCulloch & Miller, PLLC

Lifetime gifts may carry considerable advantages over charitable bequests, according to Atlantic Trust, the U.S. private wealth management division of CIBC (NYSE: CM) (TSX: CM).

Lifetime gifting allows you to see your donation make a difference. In addition to this giving advantage, there’s also the goals of receiving an income tax deduction or estate tax savings, explains the PR Newswire article titled “Benefits of lifetime charitable gifts can outweigh bequests.”

For instance, individuals who give cash to public charity typically are entitled to an income tax deduction of up to 50 percent of their adjusted gross income (AGI) or up to 30 percent of their AGI for donations of other appreciated assets that are held for at least a year. What’s more, these deductions can be carried forward for up to five years if they can’t be taken in the year the gift was made.

The Time for Giving Is Upon Us! Check Out Houston Opportunities

Published on: December 23, 2014 | By McCulloch & Miller, PLLC

The end of the year is a great time to consider making a contribution to a cause that is meaningful to you. Along with potential tax benefits, there is the enjoyment that comes from making a positive difference and helping the organization of your choice.

Is the holiday spirit prompting you to give back to charity?

Like many charities, the SPCA of Northern Nevada depends to a great extent on year-end giving in order to raise funds for its ongoing operations. The SPCA wants all of its animals to find homes during the holidays: the cost of caring for each animal is on average more than $350. It really adds up, given the thousands of animals the charity rescues every year.