Over the last few years, there have been several changes to charitable giving rules that have caused would-be donors to pause their giving. Recently, most of the tax benefits for cash giving to your favorite charitable organizations have been restricted based on whether or not you itemize on your federal tax returns.
The good news is that with the passing of The Cares Act of 2020, a benefit that has never been seen before – is now available for cash donations. This new rule allows itemizers to deduct up to 100% of their Adjusted Gross Income. Unfortunately, if you do not itemize, then the cash gift limits are $300 individually and $600 for joint filers.
Despite this historic change, it is still likely that due to the severity of the economic impact of COVID-19, the majority of charities are expecting to see a decrease in giving.
For donors who wish to give more than the cash gift limits listed above, there is an analysis that should be done to compare itemization strategies and cash or asset giving scenarios. Many times there are ways that will allow donors to give smarter assets than just staying with their individual cash giving limits. There are several ways to actually gift non-cash appreciated assets such as stocks, mutual funds, art, and real estate directly to nonprofit organizations.
Additionally, most people who have IRA accounts are not aware that they could give amounts up to $100,000 per year from their IRA accounts. In 2020, there are special expectations to the rules for mandatory IRA distributions. If you’ve already taken minimum distributions from your IRA, please have your tax advisor analyze whether those distributions were necessary. There are many other asset driven giving strategies that involve giving just the income from an asset while maintaining the asset for family heirs. In my experience, I have found that giving can be a great tool to teach family values to the next generations.
If you found any of this intriguing, then please contact your tax and financial advisors to discuss how you can creatively maximize your smart giving in the future. As a follow-up: SowHope will be hosting a free online event to discuss these Basic and Advanced Giving Strategies on Thursday, October, 15th, at 7:15pm, EDT. Please save the date and feel free to invite your tax or financial advisor or friends that may have an interest in attending as well. Register by clicking on the button below.