Gifts That Reduce Your Taxes
You can positively impact the lives of patients and their families, now and for future generations. What’s more, you may receive tax benefits for these generous gifts.
Here are the latest tax law updates that pertain to charitable giving and various tax-smart giving opportunities. Our experienced planned giving team is available to answer your questions and discuss personalized giving strategies.
Tax Law Updates
Required Minimum Distributions (RMD) for 2021:
- Required minimum distributions from retirement plans were suspended in 2020 but have been reinstated in 2021.
- For 2021, you must take an RMD from your IRA if you were 70½ or older on December 31, 2019, or if you were born at any time in 1949 or earlier (meaning you would be age 72 before December 31, 2020).
These CARES Act provisions have been modified and extended through 2021:
- Donors who do not itemize their deductions may still take a $300 charitable deduction ($600 for married couples filing jointly) for cash contributions made in 2021. This means taxpayers will be able to take the standard deduction AND deduct up to these limits when calculating their taxable income.
- In 2020 and 2021, for donors who itemize, cash donations can be deducted up to 100% of adjusted gross income.
- Cash gifts from corporations may continue to be deducted up to 25% of taxable income instead of reverting to the standard 10% limitation.
Qualified Charitable Distribution from an IRA
TGen supporters, age 70 ½ or older, can get a tax break while supporting breakthrough treatments and research with a qualified charitable distribution (QCD) gift. With a qualified charitable distribution, you get many benefits.
- Make a qualified charitable distribution from your IRA to TGen and avoid paying income taxes on your donation.
- You can donate up to a total of $100,000 each year ($200,000 for married couples) and exclude the gift from your taxable income.*
- Shape the future of health care and precision medicine.
* Complete your transfer before December 31. You should initiate your year-end transfer prior to December to ensure that the transfer is completed by December 31. Gifts made by IRA checkbook and received by TGen after December 16 may not arrive in time for the IRA custodian to count the gift as a distribution for the current year.
Gifts From Your Donor Advised Fund
You may want to continue making an annual donation to TGen but may no longer be able to itemize and deduct your donations each year as a result of the tax change. You may choose to make a gift to a donor advised fund (DAF) in an amount greater than the standard deduction, allowing you to receive the tax advantages of giving in that year. You can then maintain your regular annual support to TGen through annual recommended grants from your DAF in subsequent years when you do not itemize.
Charitable Gift Annuity Funded with Stock
If you have stocks that you have held for more than a year and have increased in value, you can use them to fund a charitable gift annuity that benefits TGen, and you will bypass a significant portion of the capital gains tax. The remaining gain will be apportioned over several years of your annuity payments rather than being taxed all at once. Plus, you will enjoy the other benefits of a gift annuity — eligibility for an immediate income tax deduction and a fixed annual payment for life — at an attractive payment rate.
Example: Evelyn, age 82, establishes a $50,000 charitable gift annuity with stock that she originally purchased for $10,000. In addition to an annual payment of $3,500 for as long as she lives and an income tax charitable deduction, more than $20,000 of her capital gain on the stock’s appreciation will never be taxed.*
*Based on payment rates as of July 1, 2020. For illustration purposes only.
Charitable Lead Trust
You contribute securities or other appreciating assets to a charitable lead trust. The trust makes annual payments to TGen for a period of time. When the trust terminates, the remaining principal is paid to your heirs.
Benefits to You:
- The present value of the income payments to TGen reduces your gift/estate tax.
- All appreciation that takes place in the trust goes tax-free to your heirs.
- The amount and term of the payments to TGen can be set so as to reduce or even eliminate transfer taxes due when the principal reverts to your heirs.
- You have the satisfaction of making a significant gift to TGen now that reduces the taxes due on transfers to your heirs later.
Charitable Remainder Trust
- Avoid paying capital gains on sales of appreciated stock and real estate.
- Convert the full value of stock into a lifetime income stream.
- Receive an immediate, significant charitable income tax deduction.
- Remove assets from your taxable estate.
Gifts of Retirement Plan Assets
Because retirement plans are taxed differently than most assets, they may actually become a tax liability. Naming the TGen Foundation a beneficiary of your retirement account can be an attractive option for leaving a legacy and reducing income and possibly estate taxes for your loved ones.
Income taxes to your beneficiaries on retirement assets can be as high as 37%. This means, for example, that a gift of $100,000 from your IRA will be worth only $63,000 when it gets to your loved ones.
Naming the TGen Foundation as a beneficiary of your retirement assets generates no income taxes. TGen is tax exempt and eligible to receive the full amount. Your gift to the TGen Foundation will not be reduced by income taxes.
Making the TGen Foundation a beneficiary of a retirement account is easy. Simply ask your plan administrator for a beneficiary designation form and include the TGen Foundation as beneficiary of a specific percentage of the account value or as a contingent beneficiary.
Gifts of Real Estate
- An immediate gift of real estate. Donating property outright to the TGen Foundation frees you from the costs and responsibilities of ownership. If you have owned the property more than a year, you will enjoy a charitable income tax deduction equal to the property’s full fair market value. You will eliminate any capital gain and the gift reduces your future taxable estate.
- A gift of real estate in your will or trust. You can include a gift of real estate to TGen in your will or living trust and you will be eligible for a charitable estate tax deduction upon your passing.
- A life income gift funded with real estate. Convert your real estate investment into a predictable income flow and realize capital gains and other tax benefits.
Gifts of Appreciated Securities
When you give appreciated securities, you may receive an immediate income tax charitable deduction as well as savings on capital gains taxes. Your gift of stock or mutual funds can also be used to generate income for life through a charitable gift annuity. You can make a gift of appreciated securities to the TGen Foundation while diversifying your portfolio and/or securing a stream of income. For direct information about gifts of stock, please call us at 866-370-8436 or email us at email@example.com. Click here for more information about establishing a charitable gift annuity with appreciated securities.
Your Giving Toolkit
This information is not intended as legal, accounting, or other professional advice.
For assistance in planning your gift(s), please consult a lawyer and/or financial advisor for professional advice.