Tax Wise Giving
Smart Ways to Support TGen
Tax law changes over the past few years have created several ways to increase your support for TGen now and in the future.
The CARES (Coronavirus Aid, Relief and Economic Security) Act, signed on March 26, 2020, the SECURE (Setting Every Community Up for Retirement Enhancement) Act, signed December 2019, and the Tax Cuts and Jobs Act (TCJA) of 2017 offer smart and taxwise giving opportunities. Our experienced planned giving team is available to answer your questions and to discuss personalized giving strategies.
Every gift strengthens TGen’s innovative research efforts to bring earlier diagnoses and smarter treatments to patients for years to come. Of course, each person’s tax situation is unique, so please do consult with your tax and/or legal advisors.
Smart Ways to Support TGen Under the CARES Act
The CARES Act encourages charitable giving by loosening some limitations on charitable income tax deductions for individuals and corporations.
Quick Facts on the CARES Act
For Individual Donors:
- Deductions on cash gifts had previously been limited to 60% of adjusted gross income (AGI). Now this limitation is suspended for 2020 only and deductions can be taken up to 100% of AGI.
- Supporters who use the standard deduction rather than itemizing can now deduct an additional $300 of cash contributions to public charities like TGen. And this deduction is permanent, not limited to 2020.
There are some restrictions:
- The gifts must be cash, rather than securities or other assets. The gifts may be given outright or used to establish a charitable gift annuity.
- The gifts must be made to public charities, not to donor advised funds, charitable trusts, supporting organizations or private foundations.
- Corporations may now deduct charitable contributions up to 25% of income, rather than 10%.
- Corporations may now deduct contributions of food inventory up to 25% of income, rather than 15%.
Required Minimum Distributions Waived in 2020:
- Under the CARES Act, required minimum distributions (RMDs) from IRAs that would have had to start in 2020 do not have to start until 2021.
- Some supporters have used their RMDs to make a qualified charitable distribution (QCD) to TGen. However, even with RMDs suspended for 2020, QCDs are still a great way for donors, especially those who don’t itemize, to make tax advantageous contributions.
- If you are 70½ or older, a QCD allows you to contribute up to $100,000 (for individuals) or
$200,000 (for married couples) to charity from your IRA without paying income tax.
* As always, please consult with your financial or tax advisor to determine the impact of these CARES Act provisions on your plans.
Other Smart Giving Opportunities
There are a number of ways make taxwise gifts to support TGen.
IRA charitable distributions may provide opportunities for income tax savings.
- Give Now: For donors 70 ½ or older, a qualified charitable distribution from an IRA allows you to donate up to $100,000 ($200,000 for couples) from your retirement account to City of Hope. 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.
- Leave the remaining funds to TGen: You may name TGen a beneficiary for all or some percentage of a retirement account, life insurance policy, bank or brokerage account. Doing so will ensure that your support for the transformative health care we provide becomes part of your enduring legacy.
A gift of appreciated assets is a smart way to support TGen.
- Capital gains tax rates have not changed, and a gift of appreciated stock is more beneficial than ever.
- A gift of real estate can also benefit you and TGen. Many real estate markets are enjoying gains. You can avoid paying immediate capital gains tax on appreciated property by making an outright gift of the property to TGen or by funding a charitable remainder trust or gift annuity. (Charitable gift annuities are established through City of Hope for the benefit of TGen.)
Consider a gift that will provide you guaranteed lifetime income and tax benefits.
- Funding a gift annuity or charitable remainder trust with appreciated property allows you to avoid capital gains taxes and receive income taxed at a more favorable rate.
- The deductions generated by these gifts are often more than the new standard deduction and if funded with cash, may be deducted up to 60% of your adjusted gross income.
(Charitable gift annuities are established through City of Hope for the benefit of TGen.)
Giving through a donor advised fund offers flexibility for you and consistent support for TGen.
- Give Now: 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.
- Leave the remaining funds to TGen: If you establish a DAF, you may designate TGen to receive a portion of the account value after your lifetime, leaving the remaining portion for your children or grandchildren to continue your legacy of philanthropy.
Learn More: Tax Cuts and Jobs Act of 2017
The Tax Cuts and Jobs Act of 2017 made significant changes with respect to the standard deduction and deduction limitations as well as revising tax brackets.
Quick Facts on the Tax Cuts and Jobs Act
1. New limits and/or changes to certain itemized deductions and the standard deduction.
- The new law nearly doubles the standard deduction to $12,000 for single taxpayers and $24,000 for married taxpayers filing jointly.
- The ability to deduct charitable gifts remains, as long as itemized deductions surpass the standard deduction.
- Under the prior law, cash gifts to charity could be deducted up to 50% of adjusted gross income. Now, they can be deducted up to 60% of adjusted gross income, allowing some supporters to make larger gifts that are fully deductible.
- The “Pease limitation” has been repealed. This former provision resulted in taxpayers losing up to 80% of their itemized deductions depending on their income.
- The new law places an itemized deduction limit of up to $10,000 for state and local taxes, including property taxes.
2. There are still seven tax brackets, but the tax rate is lower for the top 6 brackets; the top bracket is now 37% rather than 39.6%.
3. More estates will now be exempt from the estate tax.
- The amount of money exempt from the estate tax has doubled to $11.2 million per person and $22.4 million per married couple.
- While very few people paid estate tax under the prior law, even fewer will pay estate taxes now.
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.