2018 TAX REFORM: ARE YOU PREPARED FOR THE END OF THE YEAR?

Are you wondering how the introduction of the new tax law this year might impact you? For many taxpayers, the new tax law creates an opportunity in the form of increased disposable income.

In addition to some of the main points of the 2018 law, here are some things to consider for charitable giving this year.

New This Year: Income Tax Brackets – Whether you’re a single filer or a married person filing 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. Under the new law, most taxpayers will see their tax rate decrease. For example, a married couple with a combined income of $150,000 will go from a 25 percent tax rate to 22 percent.

You may now have an opportunity to give more to Parkinson’s Resource Organization because you may be in a lower bracket this year and pay fewer taxes.

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.

The new law allows you incentives to give more to Parkinson’s Resource Organization in one particular year over another to exceed the standard deduction and itemize your deductions.

Itemized Deductions – If you elect to itemize for 2018, your deductions may look a little different; however, charitable deductions remain under the new law. Under the new law, you will be able to deduct up to a total of $10,000 for state and local taxes.

Did you purchase a new home? If so, 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. Here’s a great opportunity for higher net worth donors to consider increasing cash gifts.

Estate Tax Exemption – We hope this effects you, the threshold for triggering an estate, gift or generation-skipping tax was increased to $11.18 million per person or $22.36 million for a married couple with only an estimated .1 percent subject to estate tax under the new law. For information only, 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.

Charitable Deductions Remain the Same – You will still be able to deduct your charitable contributions if you itemize your taxes.

Long-Term Capital Gains and Dividends – 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 This Means to You – 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.

• Donate Appreciated Property: Because many markets are experiencing strong growth, consider a gift of appreciated property to a Parkinson’s Resource Organization. You may qualify for an income tax charitable deduction and eliminate capital gains tax.

• Name Parkinson’s Resource Organization 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 PRO as a beneficiary of all or part of your plan, your gift will pass to us tax-free.

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.

Parkinson’s Resource Organization is helping thousands of people affected by Parkinson’s with emotional and educational support. PRO is unique in the world of Parkinson’s, and this can only be improved and made to help more people because of people like you. Thank you for thinking of us in your year-end planning.