Few would argue that the first decade of the 21st century was an extremely turbulent period on many fronts. As the decade drew to a close and the nation struggled to emerge from the longest and deepest recession since the Great Depression, economic anxiety and uncertainty grew as Congress remained gridlocked on key tax and estate laws that were scheduled to expire. Finally, in the waning moments of 2010, members of Congress agreed to a compromise, passing The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
This long-awaited bill—one of the most significant pieces of legislation pertaining to estate planning passed in the last three decades—is still just a temporary fix. Designed primarily to avoid significant tax increases that could trigger a double-dip recession, the bill essentially preserves the “status quo” while providing a degree of economic stimulus over the next few years. Like most compromises, no one is completely satisfied with every measure of the new law, but it does provide a little something for everyone. And that’s a good thing.
For ICR supporters, the major provisions of the new tax law bring a significant measure of stability, while also providing clarity to establish or revise long-range giving and estate plans.
- Tax rates remain unchanged through the end of 2012 on ordinary income, qualified stock dividends, and long-term capital gains, providing clarity on what available resources you may have to spend, invest, and give to the Kingdom.
- Payroll taxes were cut by 2 percent through the end of 2011, resulting in a small but welcome increase in take-home pay for all taxpayers. Thank God for small blessings.
- The popular IRA Charitable Rollover was restored through the end of 2011, providing traditional or Roth IRA owners age 70½ or older the ability to make charitable gifts directly to ICR without declaring it as income. These IRA gifts also qualify as required minimum distributions, providing a twofold opportunity to support ICR while avoiding taxes on income you would otherwise be required to take. If this opportunity is right for you, please contact your IRA administrator to get started.
- After a one-year repeal, the estate tax was renewed, but at a higher exemption threshold of $5 million per person through the end of 2012. While this higher cap protects over 98 percent of taxpayers from estate taxes, it creates a renewed incentive for wealthy donors to explore charitable remedies that may protect their estates.
- Separate gift and estate tax provisions have now been combined under the new $5 million exemption—a very welcome enhancement. Amounts given either during your lifetime or at death will now apply against the higher cap, providing the chance to experience the joy of giving during your lifetime, rather than delaying your gifts until after death.
Christ most certainly confirmed the responsibility of all believers to “render…unto Caesar” (Luke 20:25) a legitimate portion of our resources to support those governmental authorities established by God (see Romans 13:1-7). Now that the tax uncertainties have been relieved, ICR trusts that our faithful supporters will take advantage of these new opportunities to support our work in the Kingdom. Please contact us regarding any questions or assistance you may need. We would be delighted to help.
* Mr. Morris is Director of Donor Relations at the Institute for Creation Research.
Cite this article: Morris IV, H. 2011. Rendering unto Caesar…Tax Law Changes Bring Welcome Relief. Acts & Facts. 40 (3): 21.