TALENTS FALL 2019 Wheaton College Gift and Estate Planning Newsletter INSIDE THIS ISSUE Year-End Gifts 2-3 The Mailbox Rule 3 Life Income Agreements 4 Year-End Story 4 Dear Friends, The most wonderful time of the year is almost here. As the end of 2019 draws near, you are probably busy “wrapping up” many things. There are parties to plan, events to attend, gifts to purchase, and of course, traveling to do. Don’t forget that the end of the calendar year also signals the end of another taxable year, which can affect your planning. With so much going on, it can be easy to miss headlines and deadlines that may affect you (and your taxes). This year, for the first time since its enactment, we experienced the effects of the Tax Cuts and Jobs Act of 2017 on our tax returns. Perhaps you were pleased with the changes. Maybe you were disappointed to learn what the tax overhaul meant for your situation. Either way, this year, make sure to utilize all possible exemptions, deductions, and overall planning to maximize your charitable giving tax savings. Read on to make sure that you are aware of some important financial and tax-related tips pertaining to charitable gifts made at the end of the year. We will avoid unnecessary trimmings – with the hope that you can avoid unnecessary tax trappings this year. Lindsay Jurgensen Associate Director of Gift Planning Services
Transcript
talents
FALL 2019
Wheaton College Gift and Estate Planning Newsletter
INSIDE THIS ISSUE
Year-End Gifts 2-3
The Mailbox Rule 3
Life Income Agreements 4
Year-End Story 4
Dear Friends,
The most wonderful time of the year is almost here. As the end of 2019 draws near, you are probably busy “wrapping up” many things. There are parties to plan, events to attend, gifts to purchase, and of course, traveling to do. Don’t forget that the end of the calendar year also signals the end of another taxable year, which can affect your planning.
With so much going on, it can be easy to miss headlines and deadlines that may affect you (and your taxes). This year, for the first time since its enactment, we experienced the effects of the Tax Cuts and Jobs Act of 2017 on our tax returns. Perhaps you were pleased with the changes. Maybe you were disappointed to learn what the tax overhaul meant for your situation. Either way, this year, make sure to utilize all possible exemptions, deductions, and overall planning to maximize your charitable giving tax savings. Read on to make sure that you are aware of some important financial and tax-related tips pertaining to charitable gifts made at the end of the year. We will avoid unnecessary trimmings – with the hope that you can avoid unnecessary tax trappings this year.
Lindsay JurgensenAssociate Director of Gift Planning Services
There are several ways to financially support min-istries like Wheaton College with a year-end gift while also securing benefits for your 2019 income tax return. There are unique advantages – as well as specific requirements – associated with each type of gift. This issue of Talents is intended to inform and remind you of some of these particularities so that you can maximize the benefits available to you.
mArketAbLe securities If you have appreciated marketable securities owned for more than a year, you may want to con-sider donating shares. Not only will you avoid the capital gains taxes that would have been due if you were to sell the shares, but you will also receive a charitable income tax deduction for the fair market value of the shares. Appreciated stock or ETFs in a brokerage account are typically easy to transfer in a matter of days, but transferring mutual fund shares can take longer. Contact us for electronic transfer instructions. cAsh giFts Making a cash gift is a quick and easy way to give. Typically, you can give online, by phone, or by mail. If mailing a check, make sure you are familiar with the “Mailbox Rule” (see box). donor Advised Fund Having trouble deciding about which charities to support this year (besides Wheaton, of course)? Consider making your 2019 charitable gifts through a Wheaton College Donor Advised Fund (DAF). Then take your time to decide which charities to support through your DAF. You will receive a 2019 charitable deduction for contributions to your DAF made in 2019, even if distributions are not made until 2020. If the increased standard deduction has affected your ability to utilize the charitable deduc-
Considering making a charitable gift this year? It’s not too late!
A gift via check sent by U.S. mail is generally delivered to a charity (and deductible for tax purposes) when it is mailed. This means, for example, that a personal check mailed to Wheaton College must be postmarked no later than December 31, 2019, in order for it to be a deductible gift in 2019. Don’t just drop it in the mailbox. It’s a good idea to send it registered mail or certified mail and get a receipt. The Mailbox Rule does not apply to qualified charitable distributions from IRAs or to checks sent through private mail (such as UPS).
The Mailbox RuleYear-End Giftstion, consider “bunching” several years of giving into one with a Wheaton DAF. In doing so, you may be able to itemize your larger 2019 deductions and recom-mend distributions for future years, even if you do not itemize in those years.
quALiFied chAritAbLe distributions Did you know that you can make a Qualified Charitable Distribution (QCD) of your annual Required Minimum Distribution (RMD)? This is a great option if you are at least 70 ½, own a traditional Individual Retirement Account, and don’t need all of your RMD. You can give up to $100,000 per year. A QCD counts toward your RMD, but does not count as income to you – a tax advantage to both itemizers and non-itemizers alike. Below are two ways to make a QCD: method 1 The IRA owner contacts the custodian to request that the RMD be donated to a favorite charity. The custo-dian mails a check directly to the charity on the IRA owner’s behalf. It’s crucial that the donation is payable directly from the custodian to the charity to qualify as a QCD. Timing rules can be complicated, so make sure that the charity receives the check in 2019. method 2 If the IRA owner has an IRA checkbook and check-writing privileges, he may use it to make a QCD. He mails a check from the IRA checkbook to the charity. The charity deposits the check, and then the cus-todian releases the funds to the charity. It sounds simple, but timing is key to qualify as a QCD. A timely QCD requires action by both the charity and the custodian. Be careful with IRA checkbook QCDs. The rules are complicated as to when it is con-sidered a gift to charity, income, and a QCD. It’s vital that the IRA check arrives at the charity well before the end of the year, allowing the charity to deposit
the check and the check to clear. If the funds are not transferred by the custodian to the charity in time, the IRA owner could face a 50% penalty for his RMD. Leave plenty of time if you want to make a QCD using your IRA checkbook.
Type of GiftTiming
InformationBest Practices for 2019
Tax Benefits
Check in the mail (via USPS)
Delivered when mailed.
Postmarked by 12/31/19. Note: “Delivered when mailed” does not apply when sending via private mail (such as UPS).
Bank Credit Card
Deductible in the year the charge is made.
Charge by 12/31. *See box for credit card gift instructions for Wheaton College.
Stocks / ETFs
Charity must receive by 12/31. If in certificate form, must be received or mailed with postmark by 12/31.
Transfer process can take a few days. Get started no later than 12/15 to ensure the stock is received by charity by 12/31.
Mutual Funds
When held in brokerage account, requires paper transfer by donor and charity. When held by MF company, requires electronic transfer. Charity must receive by 12/31.
Transfer can take weeks (even a month). Start by communicating with the charity and your broker right away. It’s a good idea to start by 11/15 to ensure that mutual funds are received by charity by 12/31.
Qualified Charitable Distribution
Be careful with QCDs. A timely QCD requires action by both the charity and the custodian. Leave plenty of time!
Contact the custodian by no later than 12/1 to request a direct distribution to charity. If using an IRA checkbook, consider mailing a check no later than 12/1.
Check with your specific charities about when they close for the holidays.
For example, to receive a 2019 tax-deductible receipt from Wheaton College when giving by credit card, please:
1. Give online by credit card through 11:59 p.m. Tuesday, December 31, 2019 OR
2. Call 1.800.525.9906 with your credit card gift through 5 p.m. (CST) Tuesday, December 31, 2019 OR
3. Mail your credit card gift, noting that USPS delivery may be sporadic, and credit card gifts must be received in our office by Tuesday, December 31, 2019.
Generous Gene has been a faithful supporter of Wheaton College since his graduation decades ago. Knowing that his charitable dollars were supporting students, professors, and Christian education warmed his heart. For many years, Gene wrote checks and dropped them in the mail by November 15 to ensure his gift made it to Wheaton before the end of the calendar year so he’d be able to claim a charitable deduction. Over the years, as his investments have diversified and matured, he’s expanded how he gives. Gene established a gift annuity ten years ago that has provided him with fixed payments ever since, which has been a nice supplement to his retirement income.
This year, Gene considered selling mutual fund shares that have doubled in value since he bought them years ago and donating the proceeds. He learned that he could instead gift the shares directly to Wheaton, fulfilling his desire to make an annual gift while also avoiding capital gains if he sold them and then gave the cash.
He contacted Wheaton’s Gift Planning office and received instructions for the transfer. They informed him that the process can take weeks, even up to a month, depending on various factors affecting the transfer. Gene relayed the information to his broker in early November. However, his broker went on vacation and returned after Thanksgiving. Despite Gene’s early start on this process, by the time the broker got around
A Story with a Happy (Year) Ending
to the transfer, there was just barely enough time to complete the gift in 2019! Thankfully, Gene’s gift was received on December 27, so he received a charitable income tax deduction for 2019 for this gift.
The moral of the story: certain gifts take longer to process, so start early to ensure they are completed before the end of the year. If you decide to move forward with an end-of-the-year gift, contact us. We’ll do our very best to make sure that you receive tax benefits for 2019.
501 College Ave. | Wheaton, IL 60187
There is still time to set up a gift annuity or a charitable remainder trust with Wheaton College and receive a charitable income tax deduction for 2019. These unique gift vehicles provide you with a source of reliable income for years to come, as well as make a gift to Wheaton. You can fund a gift annuity with cash or appreciated securities, and the process usually takes just a few days. A charitable remainder trust can be funded with cash, marketable securities, or real estate. This process typically requires more time, especially if real estate is involved. Contact us right away to begin the process of funding either type of life income agreement.
