Charitable Giving and the Averted Fiscal Cliff
What does the American Taxpayer Relief Act of 2012 mean for you?
Below are answers to some of the most common questions concerning the American Taxpayer Relief Act of 2012 (ATRA). Please contact the Albion College Development Office at
or 517-629-0402 with questions. As with all tax matters, Albion College strongly encourages you to consult with your tax advisor.
IRA Charitable Rollover
What is the benefit of the charitable rollover?
Avoid having your required distribution be taxed as ordinary income while making a difference in the lives of Albion college students faculty, and staff by making a charitable contribution.
How do I know if I qualify?
You qualify if you are age 70 ½ or older and have a traditional, rollover or Roth IRA.
What do I do to take advantage of the rollover opportunity?
Transfer money directly from your IRA to Albion College before Feb. 1, 2013 for 2012 tax year or December 31, 2013 for 2013 tax year.
Individual Income Tax Rates
Income tax rates have changed. What are the new rates?
The existing tax brackets were extended. There is a new 39.6% bracket for married couples making $450,000, heads of household making $425,000 and single persons making $400,000.
Long-Term Capital Gains
What happened with capital gains rates?
The 15% capital gains rate for those in most higher brackets were extended. However, individuals in the new 39.6% tax bracket will now be subject to 20% capital gain rate. Additionally, because capital gains for married couples over $250,000 and singles over $200,000 will be subject to the 3.8% Medicare tax, their capital gains rate will be 23.8%.
Gift and Estate Taxes
Were the gift and estate tax exclusion made permanent?
Yes. Marital portability and the $5 million exclusion amount (with indexed increases) for gift and estate taxes were made permanent. For 2013, the expected IRS ruling will set the exclusion amount at 45.25 million. The top rate for gift and estate taxes is 40%.
Because of these changes I’m updating my will/estate plans. Is there something I can do to minimize my estate tax burden?
Yes. Talk with your estate planner. You might consider a charitable bequest to Albion or other non-profits if you haven’t already done so. For those with larger estates, consider a testamentary unitrust, charitable gift annuity, or lead trust. Depending on your situation, all can be excellent planning options.
Itemized Deduction Limits
Itemized tax deduction limits changed. What are the new limits?
ATRA creates new fixed limits for itemized deductions. Married couples will be subject to the 3% reduced deductions for adjusted gross income (AGI) over $300,000. Single persons will use a floor of $250,000 of AGI.