- The 2018 tax law increases the AGI (adjusted gross income) limit on cash contributions to 60% from 50%, while appreciated assets remain at 30% of AGI. Any amount greater than 30% can be carried forward and applied over the next 5 years.
- Benefit: Cash contributions to The Legacy Charitable Fund gain greater tax advantages than other philanthropic options like foundations or trusts.
- Philanthropists who wish to contribute assets greater than 60% AGI for cash and 30% AGI for appreciated assets in a single year can carry forward the excess for 5 years
- Benefit: Working with your tax advisor to achieve the greatest tax advantage possible, The Legacy Charitable Fund can assure your philanthropic goals are met.
- Lower tax rates for Individual and Joint tax filers – tax rates have been lowered for most filers – rates range from 10% – 39.6%
- Benefit: Lower tax rates could result in greater discretionary spending for charitable purposes. The Legacy Charitable Fund can assist all philanthropists realize their goals.
- Capital gains tax rates remain the same. Assets held for over one year and then sold are subject to capital gains taxes. The capital gains tax rate remains the same at 20% and the Medicare surtax rate of 3.8% for a total capital gains tax rate of 23.8%.
- Benefit: An “in kind transfer” of appreciated assets, Donors will eliminate the 23.8% capital gains taxes by donating those assets to The Legacy Charitable Fund. In addition, donors to The Legacy Charitable Fund will continue to take a fair market value tax deduction.
- Increased federal estate tax threshold. The 2018 tax law doubled the federal estate and gift tax thresholds to $11M for individuals and $22M for married couples filing jointly.
- Benefit: Donations to The Legacy Charitable Fund remain exempt from estate tax and many high net worth individuals offset estate taxes with charitable contributions.
- Pease limitation has been repealed. The Pease limitation was an overall reduction of itemized deductions for high income taxpayers. The rule reduced the value of a taxpayer’s itemized deduction by 3% of AGI over a certain threshold. The 3% reduction continued until it phased out 80% of the value of the taxpayer’s itemized deductions. For 2018, the Pease limitation has been repealed.
- Benefit: Repealing the Pease limitation has a positive impact on donors itemizing charitable contributions to The Legacy Charitable Fund by allowing them to deduct more. Please consult with your tax advisor to obtain the greatest benefit.
- Corporate taxes have been cut. The 2018 tax laws have reduced corporate taxes from 35% to 21%.
- Benefit: Corporations that establish a philanthropic strategy with The Legacy Charitable Fund could lower their overall tax rate further. In addition, lower tax rates make it easier for corporations to establish a philanthropic program with The Legacy Charitable Fund.
The Legacy Charitable Fund is a donor-advised fund, an IRS approved 501(c)3, and a division of the Wealth Management Division of Grogan Advisory Services. Information provided is for educational purposes and should not be considered as legal or tax advice. The Legacy Charitable Fund and Grogan Advisory Services does not provide legal or tax advice. Content provided relates to taxation at the federal level only and availability of certain federal income tax deductions may depend on whether itemized deductions are used. Specific state tax laws relevant to a particular situation may affect the applicability, accuracy, or completeness of the information provided. All investments require risk. Please consult your estate planning attorney or tax advisor regarding your particular situation.