Tax Law & Charitable Gifts
Use tax and estate planning to uphold the Church
The IRS adjusted the 2022 standard deduction threshold to $12,950 for an individual, $25,900 for a couple. To exceed the threshold, you can:
- Pick a target year to itemize and bundle your charitable gifts to exceed the threshold.
- Create a donor advised fund with a large charitable contribution that exceeds the threshold.
The 2022 limitation on cash deductions for charitable contributions is 60% of adjusted gross income. If you can afford to forego the income, help grow your parish, school, ministries or the diocese. Tax treatment of gifts of non-cash gifts is different.
The estate and gift tax exclusion is $12.06 million per person for 2022 and $12.92 in 2023. If you have a high net worth and have provided for your heirs, your assets can help sustain your parish, school, ministries, or the diocese.
Give assets excluded from taxable income
IRA Distributions: A distribution given directly from your IRA to the parish is even more valuable if you do not itemize deductions. Although starting in 2020 required minimum distributions (RMD) do not have to be taken until 72, you can still make Qualified Charitable Distributions (QCD) beginning at 70 ½. Qualified Charitable Distributions up to $100,000 may be excluded from taxable income if sent directly to a qualified charity from your regular IRA.
Gifts of Grain or Livestock: If you farm on a cash basis, you can provide significant support for the Church by donating your grain or livestock. The gift is excluded from income. Production costs are eligible for deduction if your tax situation allows.
Give appreciated assets to reduce capital gains & increase deductions
Securities: An outright gift of appreciated securities will not incur federal capital gains, plus the fair market value is eligible for deduction up to 30% of adjusted gross income. The securities must have been owned for more than a year and appreciated in value.
Real Estate or paid up Life Insurance: A gift that can be sold might allow you to make a larger gift than you ever supposed.
Give appreciated assets and receive income
Charitable Gift Annuities or Charitable Remainder Trusts: If funded with appreciated assets there is no up-front capital gains tax for you, but it is eligible for a charitable deduction and pays income for your lifetime. The remainder becomes a legacy gift for your parish.
Please consult with your own attorney and other professional advisors regarding your personal tax and financial situation.