One of the best parts of my job is working with the generous alumni, parents, and friends who are making (or have made) a planned gift to Boston College. It may be something as simple as showing a young alumnus how to add BC as a beneficiary to their 401(k) or the more complex, helping a newly-retired couple understand the right mix of tax-wise strategy options to protect their estate while strengthening the University.
Many of these conversations have included questions about how the tax reform that took effect this year will impact a donor’s charitable giving. My team and I have been working closely with the University’s tax and legal advisors, and the two main changes we anticipate affecting our donors are:
- The increased standard deduction ($12,000 for singles, $24,000 for married filing jointly), and
- The elimination or restriction of some previously itemized deductions (though the charitable giving deduction remains intact).
Whether or not you itemize in the coming year, there are still many ways to make gifts to Boston College and other charities and receive tax benefits. Though each individual’s circumstances are unique—and I encourage all donors to consult their own financial advisors for specific advice—here are some strategies to make tax-wise gifts to BC in 2018 and beyond:
- Make gifts of appreciated property such as publicly-traded stocks. The new law still allows you to make gifts of appreciated assets you have owned for at least one year without triggering capital gains tax. If you itemize deductions, you could get a double tax benefit of an income tax deduction based on the full value of your appreciated assets in addition to capital gains tax avoidance.
- Make gifts using the charitable IRA rollover. If you are 70½ or older, you can make a direct transfer from your traditional or Roth IRA of up to $100,000. You will avoid income tax on your withdrawal and it will count towards your required minimum distribution (RMD), even if you don’t itemize after the new law!
- Consider making a larger gift if your total deductions put you close to the threshold where itemizing offers greater tax benefits than the standard deduction. In this case, a larger charitable gift might be offset by the additional tax savings offered by itemizing.
- Include BC as a full or partial beneficiary of your IRA, 401(k), or other qualified retirement plan to avoid income tax that might otherwise be due from your heirs. This is an extremely tax efficient way to make gifts to BC and costs your heirs less than some other gifts.
- If your heirs may be subject to estate tax, you might consider a gift to BC from your will, trust, or other estate plans to reduce their estate tax burden.
If you have questions about any of the above, or if you would like to discuss your own philanthropic plans, please contact me or my colleagues in the Office of Gift Planning. We stand ready to help you maximize the benefits of your giving. I look forward to hearing from you soon.
Ericka L. Webb
Director of Gift Planning