Our Year-End Giving Guide is Here!

2018 Tax Reform: Are You Prepared for the End of the Year?

With the introduction of new tax law this year, you may wonder how you will be impacted. For many taxpayers, the new tax law creates an opportunity in the form of increased disposable income.

Here are the main takeaways of the 2018 law, along with some things to consider for charitable giving this year.

What’s New?

Income Tax Brackets

Whether you’re a single filer or a married person who files jointly, separately or as head of household, you will likely fall into a new tax bracket.

The new law maintains seven tax brackets, but lowers rates for most brackets. The new brackets are: 10, 12, 22, 24, 32, 35 and 37 percent. Most taxpayers will see their tax rate decrease. A married couple with a combined income of $150,000, for example, will go from a 25 percent tax rate to 22 percent under the new law.

You may be in a lower bracket this year and pay less taxes. You may now have an opportunity to give more to the charitable organizations you care about, such as St. Jude Memorial Foundation.

Higher Standard Deductions

The new law nearly doubles the standard deduction to $12,000 for single filers, $18,000 for heads of household and $24,000 for joint filers. You may be less likely to itemize on your taxes and use the income tax charitable deduction.

You may now have an incentive to give more to St. Jude in one particular year over another to exceed the standard deduction and itemize your deductions.

Itemized Deductions

If you elect to itemize this year, your deductions may look a little different (though charitable deductions remain under the new law). Under the new plan, you will be able to deduct up to a total of $10,000 for state and local taxes.

If you purchase a new home, there is now a cap on the mortgage interest deduction for the first $750,000 of debt on newly purchased homes.

Charitable Contributions for Cash Gifts

The new law increases the limitation of 50 percent of your adjusted gross income (AGI) for donations by cash, check or credit card up to 60 percent. Higher net worth donors may want to consider increasing cash gifts.

Estate Tax Exemption

The threshold for triggering an estate, gift or generation-skipping tax was raised to $11.18 million per person ($22.36 million for a married couple). Only an estimated 0.1 percent of estates will be subject to estate tax under the new law. (By comparison, the rates in 2017 were $5.49 million for individuals and $10.98 million for married couples.)

If you have a high net worth, you may no longer anticipate being subject to estate tax and have an incentive to make larger gifts during your lifetime to obtain an income tax charitable deduction instead of waiting until after your lifetime.

What’s the Same?

Charitable Deductions

You will still be able to deduct your charitable contributions if you itemize your taxes.

Long-Term Capital Gains and Dividends

The tax rates on capital gains and dividends remain the same at 0, 15 and 20 percent, depending on your tax bracket.

Charitable Contributions of Appreciated Property

The limitation on charitable gifts of long-term appreciated property to public charities will remain at 30 percent of your adjusted gross income. You can still carry over any excess for up to five additional years.

What Does This Mean for Me?

The lower tax brackets may mean that you are likely in a better financial position to help others this year. Here are three smart ways to be charitable as we close out the year.

1. Donate appreciated property.

With many markets experiencing strong growth, consider a gift of appreciated property to a nonprofit like St. Jude. You may qualify for an income tax charitable deduction and eliminate capital gains tax.

2. Name St. Jude as a beneficiary of retirement plan accounts.

Assets in your IRA, 401(k) or other qualified retirement plan accounts remain subject to income tax when distributed to your heirs. If you name us as a beneficiary of all or part of your plan, your gift will pass to us tax-free.

3. Give from your IRA (if you are 70½ or older).

Regardless of whether you itemize your taxes, this gift helps you fulfill your required minimum distribution and is not considered taxable income.

Need Help?

If you have questions, please contact Tony Truong at (714) 446-5857 or tony.truong@stjoe.org. We’d be happy to help and can discuss how you can include your support of St. Jude Memorial Foundation as part of your plans.

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A charitable bequest is one or two sentences in your will or living trust that leave to St. Jude Memorial Foundation a specific item, an amount of money, a gift contingent upon certain events or a percentage of your estate.

an individual or organization designated to receive benefits or funds under a will or other contract, such as an insurance policy, trust or retirement plan

Bequest Language

The official legal bequest language for St. Jude Memorial Foundation is: "I, [name], of [city, state, ZIP], give, devise and bequeath to St. Jude Memorial Foundation, Fullerton CA [written amount or percentage of the estate or description of property] for its unrestricted use and purpose." 
The tax ID number is 95-1643325

able to be changed or cancelled

A revocable living trust is set up during your lifetime and can be revoked at any time before death. They allow assets held in the trust to pass directly to beneficiaries without probate court proceedings and can also reduce federal estate taxes.

cannot be changed or cancelled

tax on gifts generally paid by the person making the gift rather than the recipient

the original value of an asset, such as stock, before its appreciation or depreciation

the growth in value of an asset like stock or real estate since the original purchase

the price a willing buyer and willing seller can agree on

The person receiving the gift annuity payments.

the part of an estate left after debts, taxes and specific bequests have been paid

a written and properly witnessed legal change to a will

the person named in a will to manage the estate, collect the property, pay any debt, and distribute property according to the will

A donor advised fund is an account that you set up but which is managed by a nonprofit organization. You contribute to the account, which grows tax-free. You can recommend how much (and how often) you want to distribute money from that fund to St. Jude or other charities. You cannot direct the gifts.

An endowed gift can create a new endowment or add to an existing endowment. The principal of the endowment is invested and a portion of the principal’s earnings are used each year to support our mission.

Tax on the growth in value of an asset—such as real estate or stock—since its original purchase.

Securities, real estate or any other property having a fair market value greater than its original purchase price.

Real estate can be a personal residence, vacation home, timeshare property, farm, commercial property or undeveloped land.

A charitable remainder trust provides you or other named individuals income each year for life or a period not exceeding 20 years from assets you give to the trust you create.

You give assets to a trust that pays our organization set payments for a number of years, which you choose. The longer the length of time, the better the potential tax savings to you. When the term is up, the remaining trust assets go to you, your family or other beneficiaries you select. This is an excellent way to transfer property to family members at a minimal cost.

You fund this type of trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. You can also make additional gifts; each one also qualifies for a tax deduction. The trust pays you, each year, a variable amount based on a fixed percentage of the fair market value of the trust assets. When the trust terminates, the remaining principal goes to St. Jude as a lump sum.

You fund this trust with cash or appreciated assets—and may qualify for a federal income tax charitable deduction when you itemize. Each year the trust pays you or another named individual the same dollar amount you choose at the start. When the trust terminates, the remaining principal goes to St. Jude as a lump sum.

A beneficiary designation clearly identifies how specific assets will be distributed after your death.

A charitable gift annuity involves a simple contract between you and St. Jude where you agree to make a gift to St. Jude and we, in return, agree to pay you (and someone else, if you choose) a fixed amount each year for the rest of your life.

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