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
You can transfer funds from your IRA directly to the TGen Foundation. This is an effective way to have an immediate impact on groundbreaking research. You may use this gift to satisfy the required minimum distribution from your IRA while reducing your taxable income, even if you don’t itemize. Here’s how it works:
- You must be 70 ½ years old or older.
- Your gift must be transferred directly from the IRA account to the TGen Foundation.
- Your gift is a transfer of funds from your IRA to the TGen Foundation, so it does not create taxable income for you and is not considered a charitable tax deduction.*
- You may transfer up to a total of $100,000 per year (individual) or $200,000 (married couple).
- If you are required to take a Required Minimum Distribution from your IRA, your gift can count towards it, but your gift is not limited to your RMD. If you are using a checkbook issued by your IRA administrator to make your gift, please send your gift as early as possible to ensure that it qualifies for a distribution in the current year.
* Due to recent changes in the laws governing retirement plans, please seek advice from your financial advisor regarding the tax implications of your gift, particularly if you plan to continue to contribute to your IRA after age 70 ½. Your gift may not qualify for these tax benefits.
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.
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.
You will also have the satisfaction of making a significant gift that benefits you now and TGen later.
Gifts of Retirement Plan Assets
Retirement plan gifts are an increasingly popular gift for many TGen supporters. Because retirement plans are taxed differently than most assets, they may become a tax liability. Naming the TGen Foundation as 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.
To name the TGen Foundation as a beneficiary of a retirement plan, simply contact your plan’s administrator or update your beneficiary designations online. Our Federal Tax ID number is 33-1092191.
Gifts of Real Estate
You could consider donating real estate such as a home, vacation property, undeveloped land, farmland, ranch or commercial property.
- 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 by establishing a charitable trust or gift annuity.
- A retained life estate. Through a retained life estate, you transfer ownership of your home to the TGen Foundation while retaining the right to live in the property for your lifetime. You will be entitled to a significant income tax deduction in the year the gift is made.
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 firstname.lastname@example.org.
Life Insurance Policy Gift
It’s not uncommon for people to have a life insurance policy that has outlasted its original purpose. If you do, you can use it (or a percentage of it) to reduce your taxes and create a gift that demonstrates your commitment and belief that TGen positively impacts the future of health care through its research.
- Request a beneficiary designation form from your life insurance company and make TGen a full, partial or contingent beneficiary.
- Sign over a fully paid policy. You will be allowed a tax deduction for your generosity.
- Sign over a partially-paid policy and make annual gifts to the TGen Foundation for the premium payments.
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.