Direct Gifts to the Charity
*In 2020, Individual Taxpayers can claim an “above the line” deduction of up to $300 for cash donations made to charities during this year only.
*Some donors can benefit by “bunching” their charitable gifts into a donor advised fund (DAF). Donors who make gifts through a DAF, should consider this.
*In 2020, a donor has the ability to have an unlimited deduction of cash, and this will expire after 2020.
*Individual Retirement Accounts (IRA’s) may be the source for direct gifts to charity each year. An IRA owner who is 70 ½ or older may give up to $100,000 to charity each year. There are a number of benefits, including the fact that the distribution will not be taxable to the donor.
*Remember that the IRA Required Minimum Distribution (RMD) is suspended for 2020, so this tax benefit does not exist.
Planned Giving Year End Strategies
*Charitable Gift Annuities (CGAs) and Charitable Remainder Trusts (CRTs) also generate charitable deductions which may be used to exceed the standard deduction on 2020 Taxes. A gift by year end to create a CGA or CRT can help a donor maximize their deductions.
*Smaller CGAs may not help the donor exceed the standard deduction, but the partially tax-free payments it generates can be very beneficial. Let all of your potential planned gift donors know they should create their gift by December 31st.
*Remember gifts mailed through the US Postal Service must be postmarked by December 31 to count as a 2020 gift, even when it arrives in the new year. However, gifts made through a private delivery system, such as FedEx, are considered effective when they arrive, not when they were sent.
Header image: iStock.