The title of this sounds pretty lacking in the “merry and bright” department…especially considering this is the 25 Days of Giving series! But, the name here describes a little-known deduction beneficial for volunteers…and nonprofits to stress to volunteers to indeed encourage more volunteering!
The IRS does NOT allow a charitable deduction for volunteering your services. However, out-of-pocket expenses relating to volunteering are deductible. Yes, seriously!
Any given charity should provide volunteers with a description of the contributed services and state whether there has been any transfer from the charity of goods or services back to the donor. In addition to other out-of-pocket expenses, mileage is deductible at the IRS rate. Also, expenses like tolls and parking can be deductible.
For example, if a volunteer travels to attend a meeting or conference sponsored by the charity, then there is a deduction only if there is “no significant amount of personal pleasure” in the meeting. This has become known as the “no smile” rule. To be deductible, the principal purpose of the meeting must be to further charitable goals (aka operative mission). Which, if you think about it, is something worth smiling about!
Any questions as to what donors can and can’t deduct? If you’re a nonprofit organization you may have questions about the extent of information you’re required to provide. I welcome any questions on the topics and can be easily reached by phone at 515-371-6077; by email atgordon@gordonfischerlawfirm.com.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2015/05/pietro-de-grandi-198064.jpg39515927Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-12-04 14:04:242020-05-18 11:28:4125 Days of Giving: What the "No Smile" Rule Means for Your Taxes
The mission of Gordon Fischer Law Firm is to maximize charitable giving in Iowa. To that end I work with nonprofits on legal compliance and training for accepting gifts (especially complex ones) as well as the donors who want to give to their favorite organizations and causes. Small Business Saturday is great for the community and Cyber Monday is fun, but the post-Thanksgiving “day” I look forward to the most is #GivingTuesday.
Giving Tuesday takes place mid holiday season and is a great opportunity to spread awareness of nonprofits midst holiday cheer. Whether you’re prepping your nonprofit’s activities, messaging, and events for #GivingTuesday or are a donor preparing to give (and encourage others to do the same) let’s take a look at some stats from last year (2018) that show the enormous impact #GivingTuesday has.
Faith-based charities received the largest sector percentage of #GivingTuesday donations made online.
At $125 million Facebook was the largest payment processing platform.
$3.6 million of Giving Tuesday donations were made online and 17% of all views of online donation forms were made on a mobile device
$380 million was given total (which was a 45% increase over 2017)
More than 150 countries participated
Since 2012, Giving Tuesday has raised more than $1 billion in the U.S.
All year, not just on #GivingTuesday, GFLF is thrilled to work with nonprofit organizations on elements of operations including, but certainly not limited to;
Training of nonprofit boards and staff and educating on charitable giving tools and techniques;
Employment law guidance for nonprofits including advice about hiring and firing, and drafting of policies and procedures;
#GivingTuesday is a reminder that, against the backdrop of the “busy” of the holiday season, the spirit of giving is thriving. Want to chat about charitable giving? Reach out anytime by email or phone (515-371-6077)
For the majority of the 25 Days of Giving series, I’m going to focus on charitable gifts made to nonprofit organizations. But, investing in a student’s future and helping to make higher education more affordable and accessible is certainly a valid cause…and has tax benefits of its own. This brings to mind a different type of gift you can give to a loved one who is currently or planning on attending college: the 529 Plan.
The account funds can be used by the beneficiary for any purpose, but for the withdrawals to be considered tax-free, the money must be used for qualified higher-education expenses at an eligible educational institution by the student. Eligible expenses include elements associated with higher education such as: tuition, mandatory fees, books, required supplies, computers (including related hardware and software), internet access, equipment required for enrollment/attendance, and even room and board during any academic period where the student is enrolled at least half-time.
If withdrawals are made and not used for a qualified expense, the deductions must be added back to Iowa taxable income and adjusted annually for inflation. Additionally, the earnings part of the non-qualified withdrawal may be subject to a 10% federal penalty tax on top of federal income tax. A great alternative to non-qualified withdrawals if the student doesn’t end up going to or paying for school is transferring the money to another eligible beneficiary’s 529 account.
Who Can be a 529 Plan Beneficiary?
Your school years may be far behind you, but you can set up a 529 for any beneficiary. The only requirements are that the prospective or current student must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer ID number. The student doesn’t have to reside in Iowa or be related to you in any way. So, you could set-up a 529 for your niece, but also your friend’s son whom you’ve known since he was little…even if he lives in another state!
Federal, State, & Estate Tax Benefits
The most obvious benefit of College Savings Iowa 529 accounts is that contributed assets grow deferred from federal and state income taxes. Plus, Iowa taxpayers can deduct up to $3,387 in contributions per beneficiary (student) account from adjusted gross income for 2019. These contributions can usually be made up through the tax-filing deadline. (For example, you could make a tax-deductible contribution for the 2017 tax year up until the end of April 2018.)
Beyond the $3,387 state tax deduction, you can contribute up to $75,000 in a single tax year for each beneficiary (or $150,000 as a married couple filing jointly) without incurring federal gift tax. This is provided you don’t make any other gifts to that student beneficiary over the course of five years. For the purpose of the contribution, it’s as if you made the $75,000 gift over the course of five years. Any additional gifts made to the beneficiary during that five-year period will incur a gift tax.
There’s another major benefit when it comes to the 529 and estate taxes. Money contributed to a 529 account is generally treated as a “completed gift” to the student beneficiary, but as the contributor/participant, you still have control over the money. If you were to die with money remaining in your account, it will not be included in your estate for federal estate tax purposes. In short, the 529 is a valid tool if your goal is to reduce the total of your estate to avoid the estate tax, but still, help a student you care about.
In terms of the estate tax, if you took the option for the $75,000 contribution ($150,000 for married couples) to a 529 plan account as if it was made over five years and then you die within the five-year window, a prorated portion of the contribution will be subject to estate tax. This can get a bit confusing, so please speak with your trusted estate planning attorney or tax advisor for more personalized information.
What’s your experience with 529 plans? Any questions in regards to how contributing to a 529 plan could impact your tax savings? Don’t hesitate to contact me by email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077).
https://www.gordonfischerlawfirm.com/wp-content/uploads/2017/12/jeshoots-com-445133.jpg36485472Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-12-02 09:06:092020-05-18 11:28:4125 Days of Giving: How the 529 Plan can be a Tax-Beneficial Gift
25 Days of Giving: What the “No Smile” Rule Means for Your Taxes
Charitable Giving, Taxes & FinanceThe title of this sounds pretty lacking in the “merry and bright” department…especially considering this is the 25 Days of Giving series! But, the name here describes a little-known deduction beneficial for volunteers…and nonprofits to stress to volunteers to indeed encourage more volunteering!
The IRS does NOT allow a charitable deduction for volunteering your services. However, out-of-pocket expenses relating to volunteering are deductible. Yes, seriously!
Any given charity should provide volunteers with a description of the contributed services and state whether there has been any transfer from the charity of goods or services back to the donor. In addition to other out-of-pocket expenses, mileage is deductible at the IRS rate. Also, expenses like tolls and parking can be deductible.
For example, if a volunteer travels to attend a meeting or conference sponsored by the charity, then there is a deduction only if there is “no significant amount of personal pleasure” in the meeting. This has become known as the “no smile” rule. To be deductible, the principal purpose of the meeting must be to further charitable goals (aka operative mission). Which, if you think about it, is something worth smiling about!
Any questions as to what donors can and can’t deduct? If you’re a nonprofit organization you may have questions about the extent of information you’re required to provide. I welcome any questions on the topics and can be easily reached by phone at 515-371-6077; by email at gordon@gordonfischerlawfirm.com.
#GivingTuesday: Facts & Figures
Charitable Giving, Events, NonprofitsThe mission of Gordon Fischer Law Firm is to maximize charitable giving in Iowa. To that end I work with nonprofits on legal compliance and training for accepting gifts (especially complex ones) as well as the donors who want to give to their favorite organizations and causes. Small Business Saturday is great for the community and Cyber Monday is fun, but the post-Thanksgiving “day” I look forward to the most is #GivingTuesday.
Created by the Belfer Center for Innovation & Social Impact at the 92nd Street Y in New York, along with the United Nations Foundation, in 2012, #GivingTuesday is a celebration for support of philanthropy and giving. Social media has helped grow the event into a global occasion, connecting countries, organizations, and donors around the world.
Giving Tuesday takes place mid holiday season and is a great opportunity to spread awareness of nonprofits midst holiday cheer. Whether you’re prepping your nonprofit’s activities, messaging, and events for #GivingTuesday or are a donor preparing to give (and encourage others to do the same) let’s take a look at some stats from last year (2018) that show the enormous impact #GivingTuesday has.
All year, not just on #GivingTuesday, GFLF is thrilled to work with nonprofit organizations on elements of operations including, but certainly not limited to;
If your nonprofit is interested in any such services, I offer a free consultation!
#GivingTuesday is a reminder that, against the backdrop of the “busy” of the holiday season, the spirit of giving is thriving. Want to chat about charitable giving? Reach out anytime by email or phone (515-371-6077)
25 Days of Giving: How the 529 Plan can be a Tax-Beneficial Gift
Charitable Giving, Taxes & FinanceFor the majority of the 25 Days of Giving series, I’m going to focus on charitable gifts made to nonprofit organizations. But, investing in a student’s future and helping to make higher education more affordable and accessible is certainly a valid cause…and has tax benefits of its own. This brings to mind a different type of gift you can give to a loved one who is currently or planning on attending college: the 529 Plan.
The 411 on the 529
Gordon Fischer Law Firm is dedicated to Iowans, so I’ll focus on the College Savings Iowa 529 plan, but know that all 50 states and D.C. sponsor at least one type of 529 plan. There are two types of 529 plans—prepaid tuition plans and college savings plans. The College Savings Iowa plan is a tax-advantaged program sponsored and administered by the Treasurer of the State of Iowa. The purpose? Just as the name “college savings” says, it is intended to “help an individual or a family pay for higher-education costs.”
The account funds can be used by the beneficiary for any purpose, but for the withdrawals to be considered tax-free, the money must be used for qualified higher-education expenses at an eligible educational institution by the student. Eligible expenses include elements associated with higher education such as: tuition, mandatory fees, books, required supplies, computers (including related hardware and software), internet access, equipment required for enrollment/attendance, and even room and board during any academic period where the student is enrolled at least half-time.
If withdrawals are made and not used for a qualified expense, the deductions must be added back to Iowa taxable income and adjusted annually for inflation. Additionally, the earnings part of the non-qualified withdrawal may be subject to a 10% federal penalty tax on top of federal income tax. A great alternative to non-qualified withdrawals if the student doesn’t end up going to or paying for school is transferring the money to another eligible beneficiary’s 529 account.
Who Can be a 529 Plan Beneficiary?
Your school years may be far behind you, but you can set up a 529 for any beneficiary. The only requirements are that the prospective or current student must be a U.S. citizen or resident alien with a valid Social Security number or other taxpayer ID number. The student doesn’t have to reside in Iowa or be related to you in any way. So, you could set-up a 529 for your niece, but also your friend’s son whom you’ve known since he was little…even if he lives in another state!
Federal, State, & Estate Tax Benefits
The most obvious benefit of College Savings Iowa 529 accounts is that contributed assets grow deferred from federal and state income taxes. Plus, Iowa taxpayers can deduct up to $3,387 in contributions per beneficiary (student) account from adjusted gross income for 2019. These contributions can usually be made up through the tax-filing deadline. (For example, you could make a tax-deductible contribution for the 2017 tax year up until the end of April 2018.)
Beyond the $3,387 state tax deduction, you can contribute up to $75,000 in a single tax year for each beneficiary (or $150,000 as a married couple filing jointly) without incurring federal gift tax. This is provided you don’t make any other gifts to that student beneficiary over the course of five years. For the purpose of the contribution, it’s as if you made the $75,000 gift over the course of five years. Any additional gifts made to the beneficiary during that five-year period will incur a gift tax.
There’s another major benefit when it comes to the 529 and estate taxes. Money contributed to a 529 account is generally treated as a “completed gift” to the student beneficiary, but as the contributor/participant, you still have control over the money. If you were to die with money remaining in your account, it will not be included in your estate for federal estate tax purposes. In short, the 529 is a valid tool if your goal is to reduce the total of your estate to avoid the estate tax, but still, help a student you care about.
In terms of the estate tax, if you took the option for the $75,000 contribution ($150,000 for married couples) to a 529 plan account as if it was made over five years and then you die within the five-year window, a prorated portion of the contribution will be subject to estate tax. This can get a bit confusing, so please speak with your trusted estate planning attorney or tax advisor for more personalized information.
What’s your experience with 529 plans? Any questions in regards to how contributing to a 529 plan could impact your tax savings? Don’t hesitate to contact me by email (gordon@gordonfischerlawfirm.com) or phone (515-371-6077).