Year End Tax Giving Strategies
While this has been a difficult year for many, the U.S.
stock market, as well as other financial assets, have significantly increased
in value throughout the year. This provides an opportunity to consider
making a gift of appreciated assets to Temple Isaiah and also enjoy related tax
benefits. Below, we have summarized a few of the well-established ways to
get more from your year-end giving. As always, be sure to consult with
your tax advisor to make sure you make the best decision based on your individual
financial and tax situation.
Make a cash gift. As part of the Coronavirus
Aid, Relief, and Economic Security (CARES) Act passed earlier this year, cash
contributions to qualified nonprofits such as Temple Isaiah can be deducted up
to 100% of your adjusted gross income for the 2020 calendar year. The Act also
expanded charitable giving incentives and allows taxpayers who take the
standard deduction to make up to $300 of charitable contributions to qualified
nonprofits this year. To qualify, you must make your gift before Dec.
Contribute to your donor advised fund. If you
have a donor advised fund, you can contribute to it before Dec. 31 and
enjoy tax savings in that amount when you itemize on your tax return in the
spring. When you’re ready, you recommend distributions be made to support the
organizations you care about most.
Give from your individual IRA. Despite the CARES
Act’s temporary suspension of required minimum distributions for 2020, giving
to Temple Isaiah directly from your IRA is still a great way to support our
work while enjoying tax savings for those 70½ or older. A married couple can
designate up to $100,000 each to qualified charity. Through a qualified
charitable distribution, you pay no income taxes on the distributed amount for your
gift, but there is no charitable contribution deduction on your personal tax
return. You also gain the satisfaction of knowing your gift can be put to use
today, allowing you to see the impact of your generosity. For your gift to
count in 2020, we must receive it by Dec. 31.
Give from your individual stock or bond portfolio. By donating stock from your personal portfolio that has appreciated for more
than a year, you are actually giving 20 percent more than if you sold the stock
and then made a cash donation as you are able to avoid capital gains taxes
which are currently at maximum tax rate of 20 percent on long-term holdings.
Given that the Dow Jones Industrial Average rose from about 18,000 at the end
of March 2015 and is currently hovering around 29,000 you are likely to realize
a taxable profit on the sale of assets you purchased in the past five years.
But if you donate the stock directly to Temple Isaiah, there’s no capital gains
tax to pay. Plus, you are still eligible to deduct the full fair-market value
of the asset you donated from your income taxes, up
to the overall amount allowed by the IRS. And remember that your
appreciated assets can also include assets that are not publicly traded such as