Preparing for Tax Season

Ready or not, it’s year-end again, which leads us right into tax season – that “most wonderful time of the year!” Here is our quick review of the tax reporting process for life income gifts.

  1. Before starting any actual tax reporting, the charity (and its agents) needs to ensure that all pertinent information has been entered into the system of record. Missing social security numbers must be obtained, and missing cost-basis information must be supplied to render accurate tax reporting. The charity should review any preliminary reports to check for possible errors.

  2. Once the data is complete, the charity may begin the production of tax reporting forms for charitable gift annuities (CGAs). The IRS requires that a Form 1099-R must be produced and sent for each annuitant of a CGA by February 1. PG Calc’s GiftWrap makes this process fairly straightforward, and we recently sent our annual summary of the “Year End Operations and 1099-R Instructions” to all GiftWrap clients. If you are a GiftWrap client and you have not received this message, please contact us.

  3. Once the 1099-Rs have been sent, the charity will need to respond to notices of address changes and notifications of annuitants who have passed. This part of the process could take several weeks, and it may be necessary for the charity to issue one or more corrected 1099-Rs.

  4. The next step is sending the tax information for all CGAs to the IRS. This can be done easily in GiftWrap, with an electronic filing deadline of March 31. For those organizations with 250 annuitants or fewer, the reporting can be done with paper copies of all 1099-Rs, albeit with an earlier filing deadline of March 1.

  5. In addition to CGAs, many organizations are also involved with charitable remainder trusts (CRTs) and/or pooled income funds (PIFs). Unlike the simple Form 1099-R that is used for CGAs, the tax reporting process for CRTs and PIFs requires the preparation and filing of one or more annual tax returns. All income and capital gains distributed to beneficiaries of those gift vehicles is done on the Form K-1, which is actually a part of the annual tax return.

    Please note: the Forms K-1 for beneficiaries of CRTs and PIFs are required to be completed and sent by April 15. In most cases, however the K-1s will be produced and sent sometime in March. It is rare these days for the K-1s to be available in February. Be sure to set expectations for your beneficiaries accordingly.

  6. The final step of tax reporting for CRTs and PIFs is for an authorized person at the charity to approve and file each tax return by April 15.

If you have any questions, please contact PG Calc Client Services at 888-474-2252, or email at

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