Tax Law Changes for 2013

Are you wondering how the American Taxpayer Relief Act of 2012 will affect you and your support of Whitman College?

The IRA Charitable Rollover has returned for 2012 and 2013

Congress has revived a provision allowing tax-free gifts from an IRA.  If you are 70 ½ years of age, or older, you can make gifts to qualified charities like Whitman from your IRA without paying taxes on the distribution.  The gift must be made before December 31, 2013 and follow specific rules, including the gift must transfer directly from your IRA to Whitman College. 

Congress included two special transitional rules to allow certain IRA gifts to be included in the 2012 tax year.

1. Qualified charitable distributions made between January 1, 2013 and January 31, 2013 may be counted retroactively in the 2012 tax year.

2. An IRA distribution taken by a taxpayer in December 2012 may be re-characterized as a qualified charitable distribution for the 2012 tax year if a cash gift is completed before February 1, 2013.

Supporting Whitman with a gift from your IRA is a great strategy to reduce taxable distributions from your IRA.  It's beneficial whether or not you itemize your tax deductions.

Income Tax and Capital Gains Tax

The federal ordinary income tax rate, qualified dividend income tax rate, and capital gains tax rate have increased for single filers with adjusted gross income (AGI) exceeding $400,000 and married joint filers with AGI exceeding $450,000.  Taxpayers in this top marginal rate are subject to a 39.6% ordinary income tax rate.  In addition, the tax rate for long-term capital gain income and qualified dividend income is now 20% for these taxpayers.


Estate Tax, Gift Tax, Generation-Skipping Tax

The $5,000,000 unified exemption for federal estate taxes, gift taxes, and generation-skipping taxes is now permanent and will be adjusted annually for inflation.  The top rate has increased to 40%.  The annual gift tax exclusion is now $14,000.


Itemized Deductions

Single filers with adjusted gross income (AGI) exceeding $250,000 and married joint filers with AGI exceeding $300,000 are subject to reduction of itemized deductions.  Known as the Pease limitation, taxpayers exceeding the AGI threshold will reduce their itemized deductions by 3% of the amount of AGI in excess of the thresholds.  The threshold will be adjusted for inflation.  A few deductions, such as medical expenses and investment interest, will not be subject to the reductions.

Always Consult with your Tax Advisor

There are many additional changes to tax laws impacting you.  Consult your tax advisor to learn more about how to plan for these changes.

Please contact Jamie Kennedy in the office of gift planning if you are considering a gift and have questions about the implications of the tax law on charitable giving.  He may be reached at (509) 527-5989 or kennedjj@whitman.edu .

The information on this website is general gift, estate, and financial planning information for educational purposes. It does not provide legal or tax advice. For advice or assistance on specific gifts and decisions please consult an attorney or other professional advisor.