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Articles Tagged with giving to charity

Nathan VinsonBelieve it or not, the end of 2020 is quickly approaching (insert collective sigh of relief). While I think most of us are ready to start looking forward to 2021 and would prefer to not even have to utter the words 2020 anymore, now is the time to finish off the year strong by reviewing simple, yet important, year-end tax planning and wealth transfer tips.

When most people think of tax planning and wealth transfer, they may have in mind complex estate planning documents and an overload of legal and accounting advice.  But that doesn’t have to be the case.  Here are three simple tips that you can implement with relative ease, though you will want to consult your tax advisor first.

1. The Annual Gift Tax Exclusion. The simplest tax planning and wealth transfer technique involves the all-too-familiar annual gift tax exclusion.  The annual gift tax exclusion is an amount that a person may give to another person without having to file a gift tax return or otherwise report to the IRS.  The current exclusion is $15,000 per person receiving the gift.  The exclusion is indexed for inflation, but it may only increase in $1,000 increments.  Further, married taxpayers may elect “gift-splitting,” which basically doubles the amount of the gift that they may make to one person using the gift tax exclusion; for each person receiving the gift, the limitation would be $30,000 rather than $15,000.  For example, if a married couple has two children and four grandchildren, they can give up to $30,000 to each of these people tax-free and without having to report it to the IRS.  Therefore, the married couple may transfer $180,000 total to the children and grandchildren.  Going further, if the children are also married, the taxpayers may give an additional $30,000 to each child’s spouse, which may be desirable if the child and the spouse hold a joint checking or investment account.  Note, however, that a gift tax return would need to be filed if the taxpayers elect gift-splitting.  The gifts are not taxable at all, but the IRS would like to know that the $30,000 was gifted via gift-splitting.

By Leah Morrison

Leah Morrison

 Leah Morrison

English, Lucas, Priest & Owsley, LLP

2018 Kentucky legislation expanded the types of services subject to sales and use tax, established economic nexus thresholds for remote retailers, and amended certain excise taxes. In other words, 2018 brought new headaches to Kentucky businesses statewide. But one group in particular was more burdened than the rest: nonprofit organizations. New legislation forced nonprofits to pay sales tax on all the extended services, if applicable, plus, most notably, on sales of admission. This cut deeply into a nonprofit’s ability to raise funds at fundraising events.

Nonprofits had to employ some creative techniques to separate sponsorships and donations from the costs associated with being allowed entry into their fundraising events. Additionally, sales tax had to be collected and paid on certain items auctioned during these events. If the auction item in question was a physical object, tax had to be paid on it – and at the auctioned price, not the actual, retail value of the item. But auction items such as lawn care services or vacations were exempt from sales tax collection. These are only a few examples of the nightmare nonprofits were forced to navigate. Compliance with sale tax laws drained their resources and significantly impacted the ability of nonprofits statewide to provide their charitable purposes in draining the resources they had available to them.

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By Nathan Vinson, Attorney
English, Lucas, Priest and Owsley, LLP

This is that time of year when we all start thinking about taxes – and how to pay less. We’ve often gotten the news from our accountants that perhaps our refunds won’t be as large as we’d like or that we owe. Ugh to both.

This is a good time to consider if your business can be more charitably minded, and perhaps help you pare back the tax burden next year.

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By Nathan Vinson, Attorney

English, Lucas, Priest and Owsley, LLP

IRA gift provisionOver the past decade, Congress has passed a law – usually at the last minute – that allows for gifts directly from Individual Retirement Accounts to charitable organizations with favorable tax treatment. The gifts can be up to $100,000 to qualifying organizations, but it has to be made directly to the charity. The IRA gift provision has been a popular way for some to give to their favorite organizations, for two key reasons:

  • The gift counts towards your required minimum distribution from your IRA for the year. As you may know, seniors ages 70.5 and up are required to take a minimum distribution from their IRA each year.
  • The gift is excluded from taxable income. The money won’t be included in your taxable income (as it would otherwise) if the money is paid directly to the qualifying charity.

Only those who are 70.5 or older can take advantage of it.

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