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Taxes

Nonrefundable Tax Credits for Exceptional SC Donations

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What is Exceptional SC?

The Exceptional SC scholarship fund (a 501(c)(3), also known as the Educational Credit for Exceptional Needs Children or ECENC) was created by the South Carolina Legislature. The fund is made up of tax-deductible donations that serve as scholarships for tuition for exceptional needs students in South Carolina to attend an approved independent school that best serves their needs.

Applications and eligibility information are available at ExceptionalSC.org. The Exceptional SC board reviews applications and awards scholarships based on a number of criteria. Students who are awarded the scholarship must attend a school that the Education Oversight Committee has approved for program participation.

Exceptional SC begins accepting donations on July 2, 2018 at noon.

Available Tax Credits for Donors: $12,000,000.00

Anyone can donate to the Exceptional SC 501(c)(3) scholarship fund, which provides scholarships to exceptional needs students. Individuals and corporations who pay South Carolina taxes can make a donation to Exceptional SC and claim a dollar for dollar tax credit against their overall South Carolina income tax liability (personal corporate income tax). Donors can deduct contributions made to Exceptional SC on their federal income taxes under IRC Section 170.

A taxpayer may not claim more than sixty percent of his total South Carolina tax liability for the year the contribution was made.  If a taxpayer deducts the amount of the contribution on his federal return and claims the nonrefundable credit, then he must add back the amount of the deduction for South Carolina income tax purposes.

Donors are:

  • Eligible to claim a dollar for dollar credit on state income tax liability;
  • Not allowed to designate a specific student or school as beneficiary;
  • Limited by a first come, first served annual statewide cap of $12 million.

Please visit ExceptionalSC.org/donate for more information and to make a donation. §12-6-3790 provides that South Carolina tax credits for donations to Exceptional SC may not exceed $12 million for 2018.

Please check with your CPA or tax preparer if you have additional questions.

What are the Differences between a Revocable and Irrevocable Trust

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Ever wonder what are the differences between a revocable trust and an irrevocable trust? Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about the differences between a revocable and irrevocable trust on our latest podcast. Consider joining us at our next First Friday Networking at Noon event (FFN@N) to hear Chad speak on this and other topics.

You may have seen our prior article and podcast about the probate process. Or perhaps you read our post and heard our podcast on ways to avoid probate. Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility–many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing a trust requires the services of an experienced attorney, mastering the basics isn’t hard.

What is a trust?

A trust is a legal entity that holds assets for the benefit of another. Basically, it’s like a container that holds money or property for somebody else. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. The assets you choose to put in a trust depend largely on your goals. For example, if you want the trust to generate income, you may want to put income-producing securities, such as bonds, in your trust. Or, if you want your trust to create a pool of cash that may be accessible to pay any estate taxes due at your death or to provide for your family, you might want to fund your trust with a life insurance policy.

When you create and fund a trust, you are known as the grantor (or sometimes, the settlor or trustor). The grantor names people, known as beneficiaries, who will benefit from the trust. Beneficiaries are usually your family and loved ones but can be anyone, even a charity. Beneficiaries may receive income from the trust or may have access to the principal of the trust either during your lifetime or after you die. The trustee is responsible for administering the trust, managing the assets, and distributing income and/or principal according to the terms of the trust. Depending on the purpose of the trust, you can name yourself, another person, or an institution, such as a bank, to be the trustee. You can even name more than one trustee if you like.

To learn more, consider downloading our Trust Basics Article

​Intelligent Investing does not provide any tax, legal, or accounting advice. Any  material in the email or attachments has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

3 Ways to Avoid Probate

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Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about ways to avoid probate on our latest podcast. Be sure to also listen and read our prior blog and podcast on how the probate process works.
 
You may have heard about the horrors of the court proceedings after death, but in truth, probate has gotten an undeservedly bad reputation, especially in recent years. If you bypass probate, your estate will go to your beneficiaries without any court proceeding, and you may save a certain amount of time and expenses. However, there is usually little reason for most people to avoid probate today. States continue to revise their probate laws, making them more consumer friendly, particularly for small estates. In fact, there are some good reasons to distribute your property by will. Decisions are binding and have legal finality once your will is probated. Creditors who fail to file claims against your estate within a specific amount of time — usually six months after receiving notice — are out of luck.
 
 
However, some major drawbacks to probate do exist, including the time it can take. The process averages six to nine months to complete but may take up to two years or more for some complex estates, tying up the assets that your family may need immediately. Also, for a larger estate, the cost may be as high as 5 percent of the estate’s value.

To learn more, consider downloading our Bypassing Probate Article

How the Probate Process Works

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Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about how the probate process works on our latest podcast. In case you missed it, We heard Chad Groover speak at our First Friday Networking at Noon event. 

​Intelligent Investing does not provide any tax, legal, or accounting advice. Any  material in the email or attachments has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

How the Tax Cuts and Jobs Act Affects ABLE Accounts

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Expansion of 529 plans to allow transfers to ABLE accounts

The new tax legislation also allows 529 account owners to roll over (transfer) funds from a 529 plan to an ABLE plan without federal tax consequences. This ability to transfer funds will expire at the end of 2025 unless a future Congress acts to extend the law.

An ABLE plan is a tax-advantaged account that can be used to save for disability-related expenses for individuals who become blind or disabled before age 26. Like 529 plans, ABLE plans allow funds to accumulate tax deferred, and withdrawals are tax-free when used to pay the beneficiary’s qualified disability expenses, which may include (but are not limited to) housing, transportation, health care and related services, personal assistance, and employment training and support.

ABLE accounts have annual and lifetime contribution limits. Contributions from all donors combined during the year cannot exceed the annual gift tax exclusion ($15,000 in 2018). As for lifetime limits, each state sets its own limit, which is also the state’s maximum for its 529 college savings plan contributions. In most
states, this limit is at least $350,000.

A list of ABLE plans offered, by state, and a comparison tool are available at ablenrc.org.

Note: Investors should carefully consider the investment objectives, risks, charges, and expenses associated with 529 plans and ABLE plans before investing. Specific information is available in each plan’s official statement. Participating in a 529 plan or ABLE plan may involve investment risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. Before investing, consider whether your state offers residents favorable state tax benefits for 529 plan or ABLE plan participation, and whether those benefits are contingent on joining the in-state plan. Other state benefits for 529 plans may include financial aid, scholarship funds, and protection from creditors.

How the Tax Cuts and Jobs Act Affects 529 Plans

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Tax Cuts and Jobs Act Affects 529 Plans

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How the Tax Cuts and Jobs Act Affects 529 Plans is a blog that should help you know what happened as a result of the passing of the Tax Cuts and Jobs Act, a sweeping $1.5 trillion tax-cut package, became law. College students and their parents dodged a major bullet with the legislation, as initial drafts of the bill included the elimination of Coverdell Education Savings Accounts, the Lifetime Learning Credit, and the student loan interest deduction. Also on the table in early drafts of the bill was the taxation of tuition waivers, which are used primarily by graduate students and employees of higher-education institutions. In the end, none of these provisions made it into the final legislation. What did make the final cut was the expanded use of 529 plans.

Be sure to also check out our other blog on How the Tax Cuts and Jobs Act Affects ABLE Accounts.

2018 IRA and Retirement Plan Limits

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IRA contribution limits

The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2018 is $5,500 (or 100% of your earned income, if less), unchanged from 2017. The maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2018, but your total contributions can’t exceed these annual limits.

Traditional IRA income limits

The income limits for determining the deductibility of traditional IRA contributions in 2018 have increased. If your filing status is single or head of household, you can fully deduct your IRA contribution up to $5,500 in 2018 if your modified adjusted gross income (MAGI) is $63,000 or less (up from $62,000 in 2017). If you’re married and filing a joint return, you can fully deduct up to $5,500 in 2018 if your MAGI is $101,000 or less (up from $99,000 in 2017). Note that these figures assume you are covered by a retirement plan at work.

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