Thanks to Ulster Savings Bank for hosting this event, guest speaker Jonathan Gudema of Planned Giving Advisors and to all of our participants for joining us to learn more about the impact of the new tax law on charitable giving.

1. Tax Law Changes 2018
Jonathan Gudema, Esq.
Principal, Planned Giving Advisors LLC

2. What we will cover today?
 Introduction to the speaker
 Structure of your tax return
 How the new tax law impacts you
 Examples of how the new tax law impacts different situations
 Challenges and opportunities
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3. Jonathan Gudema, Esq.
 Practicing Attorney since 1994
 Member of New York and New Jersey Bars
 Advisor to nonprofits and/or working with donors on gift structures since
1998
 Advisor high net wealth families on estate planning structures since 2006
 Worked on over $500 million in estate planning and/or charitable wealth
transfer vehicles
 Principal of Planned Giving Advisors LLC since 2011
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4. Quick Review of your tax return
4
Above the
line
deductions
A
G
I
MINUS: Standard Deduction OR Itemized Deductions
Your Income
Taxable Income TIMES Your Rate = What You Pay minus any Tax Credits
Charitable
Deductions
Personal
Exemptions

5. How will the new law impact you?
Lower Brackets
Higher Standard
Deduction
State/Local Tax Cap
Personal Exemption
Eliminated
Mortgage Interest
Cap
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6. And the winner is?
 The tax relief for individuals expires
in 2025
 We will have 4 new Congresses
and at least one new President by
then
 In other words, don’t sweat that far
out into the future – enjoy the
benefits now
 And, plan accordingly
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According to the Tax
Policy Center, the tax
bill will reduce taxes
for Americans in all
income groups in 2018
— increasing after-tax
income by an average
of 2.2 percent.

7. Standard deduction - 2017
Standard
Deduction
Itemized
Deductions
Mortgage
Interest
State/Local
Taxes
Charitable
Contributions
$12,700 for
Married Joint
$9,350 for
Head of
Household
$6,350 for
Individual
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8. Standard deduction - 2018
Standard
Deduction
Itemized
Deductions
Mortgage
Interest
Capped
State/Local
Taxes CAPPED
at $10,000
Charitable
Contributions
$24,000 for
Married Joint
$18,000 for
Head of
Household
$12,000 for
individual
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9. Impact of personal exemption loss
Standard Deduction,
$6,350
Standard Deduction,
$12,000
Personal Exemption,
$4,050
Personal Exemption,
$0
2017 2018
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Standard Deduction,
$12,700
Standard Deduction,
$24,000
Personal Exemption,
$8,100
Personal Exemption,
$0
2017 2018
Single, Non-Itemizer Married Joint, Non-Itemizer

10. Impact of personal exemption loss
Standard Deduction,
$12,700
Standard Deduction,
$24,000
Personal
Exemptions, $12,150
Personal
Exemptions, $0
2017 2018
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Standard Deduction,
$12,700
Standard Deduction,
$24,000
Personal Exemption,
$16,200
Personal Exemption,
$0
2017 2018
Married Joint, Non-Itemizer
One Child Under Age 24
Married Joint, Non-Itemizer
Two Children Under Age 24

11. Above the Line Deductions
Above the Line Deductions Changes
 Alimony payers will no longer be able to shift taxable income to their former
spouses for divorce agreements entered into or modified after 12/31/18.
 Moving Expenses no longer a deduction.
 IRA contributions, Self-employment health or retirement costs, Student
Loan Interest and Qualified Tuition and Related Expenses all remain
unchanged.
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12. Below the Line Deductions
Below the Line Deductions Changes
 Standard deduction is doubled.
 Personal exemptions are eliminated.
 Deduction for state/local taxes is capped at $10,000.
 Mortgage interest deduction limited to $1 million/$750,000 loans
These particular changes could mean significant gains or loses to you,
depending on several different factors. You should consider meeting
with your accountant to begin estimating how the new tax law impacts
you and what steps you can take to improve your tax situation.
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13. Tax Brackets Single Filers
2017 2018
10% $0 to $9,325 10% $0 to $9,525
15% $9,326 to $37,950 12% $9,526 to $38,700
25% $37,951 to $91,900 22% $38,701 to $82,500
28% $91,901 to $191,650 24% $82,501 to $157,500
33% $191,651 to $416,700 32% $157,501 to $200,000
35% $416,701 to $418,400 35% $200,001 to $500,000
39.60% $418,400+ 37% $500,000+
Standard Deduction $6,350 Standard Deduction $12,000
Personal Exemption $4,050 Personal Exemption Eliminated
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14. Tax Brackets for Married Joint Filers
2017 2018
10% $0 to $18,650 10% $0 to $19,050
15% $18,651 to $75,900 12% $19,051 to $77,400
25% $75,901 to $153,100 22% $77,401 to $165,000
28% $153,101 to $233,350 24% $165,001 to $315,000
33% $233,351 to $416,700 32% $315,001 to $400,000
35% $416,701 to $470,700 35% $400,001 to $600,000
39.60% $470,700+ 37% $600,000+
Standard Deduction $12,700 Standard Deduction $24,000
Personal Exemption $8,100 Personal Exemption Eliminated
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15. Miscellaneous Deduction Changes
 The Act eliminates the deduction for interest on home equity loans,
regardless of when the home equity loan was originated.
 Individuals may no longer deduct “excess business losses” or advisor/tax
preparation fees.
 Student loan interest and qualified tuition and related expenses: not
affected.
 Phase-out (Pease) of a portion of itemized deductions for higher income
taxpayers is eliminated.
 Medical expenses exceeding 7.5% of your AGI are deductible (down from
10% - applies only to 2017 and 2018).
 Cash contributions to charitable organizations may now offset up to 60% of
your AGI (up from 50%).
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16. Example Married No Children Standard
Deduction
Married 2017 2018
AGI $150,000 $150,000
SD + PE $20,800 $24,000
Taxable Income $129,200 $126,000
Actual Tax Rate 18% 16%
Taxes Owed $23,778 $19,599
Net Tax Savings in 2018: $4,179
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SD – Standard Deduction
PE – Personal Exemption
ID – Itemized Deductions

17. Example Married With 2 Children Itemizer in
High State Tax Area
Married 2017 2018
AGI $150,000 $150,000
ID* + PE $41,200 $24,000
Taxable Income $108,800 $126,000
Actual Tax Rate 15% 12%
Taxes Owed $18,678 $19,599
Child Tax Credit $2,000 $4,000
Total Owed $16,678 $15,599
Net Tax Savings in 2018: $1,079
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*Itemized Deductions assumed to be $25,000 in 2017 and but now taking
Standard Deduction in 2018 due to loss of local/state tax deduction over
$10,000
SD – Standard Deduction
PE – Personal Exemption
ID – Itemized Deductions

18. Example Married With 4 Children Itemizer in
High State Tax Area
Married 2017 2018
AGI $150,000 $150,000
ID* + PE** $58,300 $24,000
Taxable Income $91,700 $126,000
Actual Tax Rate 14% 12%
Taxes Owed $14,403 $19,599
Child Tax Credit** $2,000 $4,000
Total Owed $12,403 $15,599
Net Tax Cost in 2018: $3,197
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*Itemized Deductions assumed to be $35,000 in 2017 and but now taking
Standard Deduction in 2018 due to loss of local/state tax deduction over
$10,000
**Assume two children are between ages 17 and 24 which don’t qualify for
child tax credit for both years
SD – Standard Deduction
PE – Personal Exemption
ID – Itemized Deductions

19. Tax on Appreciated Assets
Capital Gain Tax Rates Remain Unchanged
 The Act preserves the 0%, 15%, and 20% tax brackets for long-term capital
gains and qualified dividend income based on the same breakpoints as
under pre-Act law. For joint filers in 2018, the 15% bracket begins at
$77,200 and the 20% bracket at $479,000 ($38,600 and $425,800 for single
taxpayers, respectively).
 The Act did not eliminate or modify the 3.8% net investment income tax!
Highest earners still facing 23.8% max federal effective capital gain rate!
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20. Changes to 529 College Savings Plans
New Planning Opportunities for Parents or Grandparents of Private
Elementary and Secondary Students
 529 plans, tax-advantaged savings plan designed to encourage saving for
future college costs, are now expanded to include elementary and
secondary school expenses.
 Taxpayers will be able to withdraw up to $10,000 per year tax-free for
elementary and high school expenses, such as tuition and books.
 Another potential advantage applies to taxpayers living in states that allow
income tax deductions for 529 plan contributions. Approximately 35 states
give an account owner a full or partial state income tax deduction for
their contribution to their state's section 529 plan. In New York, for
example, up to $10,000 in 529 contributions can be deducted from taxable
state income.
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21. Estate Tax Changes
New Estate Planning Opportunities
 The new law doubles the maximum gift/ estate tax exemption, as well as the
GST exemption. Thus, as of January 1, 2018, the maximum estate/gift and
maximum GST exemption amounts–which had been scheduled to rise to
$5,600,000 under prior law–will be $11,200,000. That means a married
couple pooling their exemptions will be able to shelter up to $22,400,000
from gift, estate, and GST taxes.
 That also means an individual who had previously used all his or her estate/
gift and GST exemptions will have an additional $5,600,000 of
exemptions with which to plan.
 Gift tax annual exclusion will increase from $14,000 to $15,000.
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22. New York State Estate Taxes
New York residents: New Yorkers do not get any state tax benefit from the
increased federal estate tax exemption. New York’s estate tax “exclusion
amount” (the amount an individual can pass on free of New York estate tax)
remains $5,250,000 for decedents dying in 2018. The exclusion amount will
increase in 2019 but will be only one half of the federal estate tax exemption
amount. To make matters worse, the New York exclusion amount is phased out
for taxable estates between 100% and 105% of the exclusion. Thus, New
Yorkers whose estates exceed that 105% cap receive no benefit from the
exclusion amount; their estates are fully subject to New York estate tax at rates
of up to 16%.
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23. Challenges and Opportunities
No Longer an Itemizer
 Many more Americans will no longer itemize on their tax returns. This is a
positive if it lowers your tax costs but it also effectively eliminates the
value of the charitable income tax deduction for newly non-itemizers.
Opportunities
 For those age 70 ½ and older, you are eligible to make tax-free gifts to
qualified charities from your Individual Retirement Account (IRA) for up to
$100,000 in a year. Not only is this the equivalent of a full income tax
deduction, these transfers also qualify for your Required Minimum
Distribution (RMD).
 Those younger than age 70 ½, consider bunching your charitable
contributions for several years into one year which will tip your return into
itemizing and/or lowering your backet, possibly through the use of a Donor
Advised Fund or prepaying pledges.23

24. Challenges and Opportunities
Need to Replace Lost Deductions
 For those who remain itemizers, particularly those living in higher taxation
states, the tax increase as a result of law changes may be troubling enough
to seek out ways to expand your deductions to lesson the amounts going to
the IRS and/or replace losses in deductions.
Opportunities
 Increased direct giving or giving to donor advised funds.
 Giving of appreciated securities or real estate, which also include avoidance
of capital gains.
 Advancing payments on multi-year pledges.
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25. Challenges and Opportunities
Capital Gains Avoidance Still Relevant
 Those earning well over $200,000 a year face upwards of 23.8% capital
gains tax. Coupled with the need for additional deductions to reduce
taxable income, many may start considering gifts of appreciated assets.
Opportunities
 Gifts of appreciated securities or real estate.
 Charitable remainder trusts funded with appreciated securities or real
estate.
 Sophisticated estate plan structures like charitable lead trusts.
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26. Challenges and Opportunities
Need to Utilize New Estate Gifting Ability
 Many people maxed out their lifetime giving in 2010 to avoid feared return to
55% estate tax rate now have additional $5.6 million per person to gift to
children or grandchildren.
Opportunities
 Sophisticated estate plan structures like charitable lead trusts which can
maximize income and estate tax deductions while creating very significant
gifts to charity as well as wealth transfers to children or grandchildren.
 The changes are significant enough that estate plans should be reviewed in
any case.
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27. Takeaways
 The new tax plan may in fact benefit most once all is said and done.
 Individuals should meet with their tax advisors early enough in the year to
project the potential impact of the new law and evaluate options to improve
the situation (Note: the charitable giving deadline is December 31st, not
April 15th).
 Individuals should meet with estate planning counsel after tax counsel, to
evaluate whether there are opportunities to use additional lifetime gifting,
increase charitable deductions and avoid capital gains through a
sophisticated estate planning vehicle.
 Those with outstanding pledges or are considering campaign type gifts
should meet with charitable representatives to review charitable options
 Non-itemizers over age 70½ should evaluate giving directly from an IRA
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28. Jonathan H. Gudema, Esq.
Principal, Planned Giving Advisors, LLC
jonathan@plannedgivingadvisors.com
973-732-2455
Check out our website/blog:
www.plannedgivingadvisors.com