Donor Demographics and Tax Law Changes in McLennan County

Transcription

1 Donor Demographics and Tax Law Changes in McLennan County

2 The demographic data can be used by nonprofits to support specific programs and help identify areas for targeted donors. Homeowners

3 By identifying areas of Waco with the largest homeowner concentration of potential donors, a nonprofit can: Analyze areas for targeted mailings or phone calls Compare the data to their donor lists (sort lists by zip codes) Develop a plan of action for the highest chances of success

4 Direct Mail Service Examples: 1.United States Postal Service (USPS) Every Door Direct: "USPS Every Door Direct Mail (EDDM ) is an affordable targeted advertising technique that lets you map your marketing mail audience by age, income, or household size. You can use the EDDM mapping tool to choose the ZIP Code and carrier route that will target your best possible customers current and future. The EDDM mapping tool is easy to use and discounts are available even for small businesses."

5 2.Integ - a locally owned Waco Business Integ staff includes a USPS representative to guarantee best practices and up to date postal regulations to ensure that your message is received effectively, efficiently, and economically. And with access to the national change of address database (NCOA), we re able to correct errors, reduce list production, and minimize postage costs. For more information, contact Integ.

6 Renters It is the opposite of the homeowner slide.

7 Married with No Children

8 Percent over 65 years old

9 Could your program or campaigns targeting donations benefit from knowing where wealthy donors and/or donors without children reside?

10 Median Household Income

11 Percent Married

12 Married with Children

13 For example, programs targeting donations for childhood food supplemental programs might benefit from knowing where families with children in wealthier areas reside.

14 Percent Widowed

15 Percent Single

16 Programs targeting estate gifts (planned gifts, larger gifts) might benefit from knowing where older couples and/or single individuals live.

17 Single with a Job

18 Consider demographic changes that reflect potential donors that may be new to our area. For example, Space X has single engineers and other employees that live and work on the Highway 84 corridor to McGregor. Balcones Distilleries is a growing company downtown with many young professionals.

19 Space X

20 Tax Law Changes, Including Donor Conversions

21 Some of the Individual Tax Law Changes Form (Note: You should consult with your tax advisor for specific questions)

22 Standard Deductions: ( ) - Married Filing Jointly increase from $12,700 to $24,000 - Single and Married Filing Separately increase from $6,350 to $12,000 - Head of Household increase from $9,350 to $18,000

23 Standard Deductions Continued - For Individuals 65 & Older in 2018: - Married Filing Jointly receives an additional $1,300 each and - Head of Households & Single Taxpayers, an additional $1,600. However, the personal exemption has been eliminated.

24 Mortgage Interest - For loans taken out after December 15, 2017 interest deduction is capped at $750,000 - For loans taken out prior to December 15, $1,000,000 is the cap

25 State & Local Taxes The itemized deduction is limited to $10,000 for both sales tax or state income tax (from another state) and property taxes paid during the year

26 In addition, there is the New Section 199A: Qualified Business Income Deduction. This section applies to individuals with certain qualified trade or business income.

27 What could these changes mean for the charitable donations usually received by your nonprofit?

28 Three Strategies for Using Itemized Deductions vs the Standard Deduction: 1. Income Deduction Bunching 2. Using Donor Advised Funds 3. Using the Qualified Charitable Distribution (for those individuals 70 ½ & older)

29 1. Income Deduction Bunching - Some individuals may no longer give if they now take the standard deduction rather than itemizing their deductions. - Income Deduction Bunching Example: Individuals may continue to give in year 1, for example in 2018, but may not give in year 2 or Then in year 3, 2020, they will give 2 years worth of charitable contributions to maximize their deductions. ( ) Be prepared for fluctuations in cash donations by making sure you have adequate reserves.

30 2. Donor Advised Funds Generally, a donor advised fund is a separately identified fund or account that is maintained and operated by a section 501(c)(3) organization, which is called a sponsoring organization. Each account is composed of contributions made by individual donors. Once the donor makes the contribution, the organization has legal control over it. However, the donor, or the donor's representative, retains advisory privileges with respect to the distribution of funds and the investment of assets in the account.

31 Locally, Waco Foundation partners with donors and has the following Types of Funds Available: - Donor Advised - Designated - Funds for Common Good - Scholarship For more information: unds.aspx or contact Rachel Hobbs, CPA

32 3. Using a Qualified Distribution from an Individual Retirement Account (IRA) Chad is a single taxpayer with adjusted gross income of $97,3000 (before his IRA required minimum distribution of $7,000). His itemized deductions are $5,000 before any charitable donations from his IRA distributions.

33 Income Tax Without QCD Income Tax with QCD Adjusted Gross income $104,300 $ 97,300 No Personal Exemption 0 0 No Itemized Deduction 0 0 Standard Deduction (13,600) (13,600) Taxable income $90,700* $83,700* ====== ====== Income Tax $16,058 $14,378 ====== ====== Tax savings: $ 1,680 ======

34 Because taxpayer is over 65, he must be enrolled in Medicare and must pay Medicare premiums which are generally based on the taxable income for the tax year two years prior to the current tax year.

35 *Medicare premium annually $2,250 Tax Savings: $1,680 ===== ===== Annual Medicare premium savings $ 642 Total Tax and Medicare premium savings $2,322 =====

36 Questions? How will your nonprofit use the data presented today?