Tax-smart Charitable Giving
This has been an unprecedented year for many organizations including YOY. As you consider your year-end philanthropic priorities, we want to share a number of tax-smart opportunities for charitable giving to YOY and other organizations you care about if you act by December 31.
Thank you for your support!
Rabbi Uri Feldman
New Tax Rules for Charitable Giving
Under certain tax provisions of the CARES Act that expire on December 31, 2020, cash gifts made to nonprofit organizations can have a greater impact for both you and YOY:
- If you take the standard deduction on your federal income tax return, you can deduct up to $300 from your income for cash gifts to public charities. (Usually no deduction is allowed with a standard deduction on a federal income tax return.)
- If you itemize deductions on your tax return, you may be able to deduct cash gifts to offset up to 100% of your adjusted gross income (AGI) for 2020 only. Ordinarily the income tax deduction for charitable cash gifts is limited to 60% of AGI.
(Gifts to donor advised funds, supporting organizations, and most private foundations are not eligible for these provisions.)
- Required minimum distributions from retirement accounts like IRAs are suspended for 2020 only. However, individuals age 70 ½ and older can still make a Qualified Charitable Distribution of up to $100,000 each year directly from their IRA to nonprofit organizations like YOY, and the distribution is not included in the donor’s taxable income.
Additional Tax Advantages
Other gift vehicles that may offer tax advantages include:
- Gifts of appreciated publicly traded securities bought at least a year ago avoid capital gains tax on the appreciated value of the stock, and provide an income tax deduction equal to the full market value of the securities on the date they are received by YOY.
We encourage you to consult with your tax advisor or financial advisor for advice as you contemplate your philanthropic and financial plans.