The IRS has announced the values for 2022 of various tax items that are indexed annually for inflation. In general, values have been adjusted upward about 3.0%. Of particular interest to gift planners, the unified gift and estate tax exemption amount will be $12,060,000 ($24,120,000 per couple) in 2022, an increase from $11,700,000 ($23,400,000 per couple). For the first time since 2018, the annual gift tax exclusion will also increase, from $15,000 per person this year to $16,000 per person next year. Also of interest, the standard deduction in 2022 will increase to $25,900 for married couples filing jointly and to $12,950 for single filers, an increase of $800 and $400, respectively. Taxpayers who are 65 or older will qualify for an additional $1,400 in standard deduction on top of that (an additional $1,750 if single and not a surviving spouse). See Revenue Procedure 2021-45 (https://www.irs.gov/pub/irs-drop/rp-20-45.pdf) for complete details, including all federal income tax schedules for 2022.
Late last Friday, with bipartisan support, the House of Representatives passed the “Infrastructure Investment and Jobs Act” (HR 3684). What is the impact on charitable gift planning and year end giving? Not much. While there is much good for the country expected from it, the bill includes almost no tax changes, only one of which is even tangentially related to charitable giving: a provision requiring additional reporting for cryptocurrency transactions beginning in 2024.
At best, the current status of tax legislation is confused. There are two major pieces of legislation making their way through the process. Although they are distinctly separate bills, they are inextricably linked to one another. Each proposes different changes to tax law, and, even worse, the word “infrastructure” has been used, loosely, to describe both of them. Making matters even more confusing, the path forward in the U.S. Senate involves two procedural rules that are anything but intuitive. Confusion is never good for donors, so let’s break it down… but if you’d rather duck the policy wonk stuff, skip to the end for some thoughts about communicating with donors this year-end.
A bipartisan group of ten Senators announced agreement to the “Infrastructure Investment and Jobs Act” late Sunday, August 1, 2021, and the Senate has agreed to proceed to consider the proposed legislation. The bill includes new federal investments for hard infrastructure, such as roads and bridges, broadband internet, transit, and electric utilities. A Senate vote on the bill could take place "in a matter of days," according to Senate Majority Leader Chuck Schumer. The Senate’s summer recess is scheduled to start August 9.
The charitable remainder unitrust (CRUT) comes in five flavors, each of which can be useful in certain donor situations. The donor’s goals should dictate which of the five will work best for them.