Tax law Updates Every Nonprofit Needs to Know June 22, 2018

Tax Law Changes – What lies ahead?

Summary of Tax Provisions Two types of deductions available to individuals on their individual tax returns: Standard Deduction – a specific amount set by law Itemized Deduction – various items can be accumulated to take as deductions against income Increases to standard deduction Individuals from $ 6,350 to $12,000 Married from $12,700 to $24,000 Reduced amount that can be taken for property and state taxes to $10,000 Bonds

Summary of Tax Provisions Increased exemption for Estate Tax from $11M to $22M Charitable Contribution limit increased from 50%-60% of adjusted gross income Change in Unrelated Business Income Reduced corporate, certain business and individual income tax liability The most significant tax law changes that impact contributions are temporary provisions set to expire in 2025

Potential Impact Estimated that annual contributions will decrease between $13-$20 billion each year as it is anticipated that the number of individuals who itemized will decrease from about 30% in 2017 to 6% in 2018. As a result, of charitable giving decline projected loss of about 220,000 to 264,000 nonprofit jobs. See Tax Policy Center – The House Tax Bill Is Not Very Charitable to Nonprofits; National Council of Nonprofits – Tax Cuts and Jobs Act, H.R. 1 Nonprofit Analysis of the Final Tax Bill.

Potential Impact Possible budget cuts from government and other jurisdictions Increase in demand in services with less money and less people to serve Increased impact on Foundations Change in the Estate Exemptions estimated to reduce charitable giving by $4 billion a year November 30, 2018

US Annual Giving November 30, 2018

Charitable Giving Statistics November 30, 2018

Proposed Legislation California Federal AB 2217 would establish a procedure that would allow the taxpayer to obtain a credit against their state taxes for the amount contributed to a nonprofit charity.  SB 227 would allow the taxpayer to obtain a credit against their state taxes for the amount contributed to a newly created State fund.  Federal Universal Charitable Giving Act (S. 2023 November 14, 2017) This bill allow a deduction from gross income (above-the-line deduction) for charitable contributions of individuals who do not elect to itemize deductions for the taxable year. The deduction may not exceed one-third of the standard deduction of the individual. November 30, 2018

Charitable Giving Strategies Gifts of $250 or more are required to have written acknowledgement Noncash gifts of $5000 or more (excluding publically traded securities) are required to have qualified appraisals Bequests Bunching of Deductions Greater Utilization of Donor Advised Funds – National Philanthropic Trust Continue communicating the important impact of your organization in individual lives November 30, 2018

Charitable Giving Strategies Sell Stock and Donate Cash Donate Stock Stock Value 200,000 Capital Gain Tax (40,000) - Charitable Deduction 160,000 Amount to Charity Saves tax payer money that they would have to pay in capital gains Provides the tax payer a higher amount of charitable deduction Increases the amount provided to the charity November 30, 2018

Thank you Autumn Rossi, CPA Partner Hayashi Wayland autumnr@hw-cpa.com 831.759.6326 12