Charitable tax planning


By Sr. Laura Goedken

Upper-income donors continue to face large increases in income and capital gains tax. Individuals who live in states such as Iowa and Illinois with the state tax could face top rates of 40 percent to 44 percent on income taxes and 28 percent to 33 percent on capital gains taxes.

Sr. Goedken
Sr. Goedken

Have you considered charitable tax planning during 2016? You might want to think about a charitable remainder trust, gifts from IRAs and qualified retirement plans or a charitable lead trust.

For a charitable remainder trust, the donor puts financial resources such as cash, property and stock in a trust with a charity named as the final beneficiary. Income from the trust can go to the donor or other beneficiaries for a given number of years. Then a charity or charities receives the remainder. This instrument has tax advantages plus regular income for individuals. It also spreads income out over a number of years.


Congress passed legislation in December which enables individuals 70½ and older to donate up to $100,000 to a qualified charity annually from a qualified IRA. Our foundation (Catholic Foundation for the Diocese of Davenport), the diocese, your parish and your school are qualified charities. This withdrawal can include your minimum required distribution tax-free. Over a trillion dollars is held in qualified retirement plans in the United States.

For a charitable lead trust, the donor puts financial resources in a trust for a given period of time. The donor donates the income to a charity and, at a stated time, the principal returns to the donor. This kind of trust is often used to fund their grandchildren’s education.

For more information, contact Sister Laura Goedken at the diocese at (563) 888-4252 or

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