CARES Act Creates Changes for Charitable Giving
Category Spotlight On | Posted on October 30, 2020
2020 has been a year filled with unknowns, uncertainity, and changes as the COVID-19 Pandemic has impacted many aspects our lives. However, a generosity of spirit and hope for the future remain. As the end of the year draws near, many people chose to support charitable causes near and dear to their hearts.
We are sharing the below information to raise awareness of changes to charitable giving laws that are new in 2020. Please consider this information as a starting point in a conversation that you may wish to have with your family and/or financial planner. A good source of information on this topic may be found by clicking this link.
Overview: The new law temporarily suspends the requirements for required minimum distributions (RMD) from IRA’s, but still allows Qualified Charitable Distributions made directly to the charity of your choice. Up to $100,000 can be donated and excluded from taxable income. In addition, there are new ways you can receive financial benefits and help non-profit organizations like Ozark Greenways:
1. the new law allows all taxpayers to claim an income tax deduction for charitable contributions of cash up to $300, even taxpayers who will not itemize deductions, and
2. for those who do itemize deductions, the new law allows for cash contributions to qualified charities to be deducted up to 100% of your adjusted gross income for the 2020 calendar year. That means a person could reduce their taxable income to $0 by making an equivalent charitable contribution. This is quite an opportunity! Granted, not everyone can make such generous gifts, but for some, this is an opportunity to realize current or future gifting goals AND reduce or eliminate income tax liabilities for 2020. Example: Joe’s estate plan includes a gift of $75,000 to Ozark Greenways upon his death. Because Joe’s total estate is less than the current estate tax exemption amount (roughly $11 million), this strategy provides no tax benefit to Joe or his heirs. Instead of the estate gift, if Joe donated $75,000 in 2020, he could reduce his taxable income by that same amount, saving him thousands of dollars in income tax. Joe could give enough to completely eliminate his taxable income resulting in $0 of income tax for 2020. Result: Joe saves money on taxes and helps Ozark Greenways continue their mission of connecting communities with trails.
The above information was compiled by Jim MacKay, CFP.
The COVID-19 Pandemic has highlighted the need people have to be outside, and many folks that call our region home have flocked to our trails and parks to find respite and fun. We believe that our region's greenway trails are an endowment to the community, provided by members and contributors like you. They are not only being enjoyed and appreciated in this moment, but they will also increase the quality of life for future generations. From all of us, and from all who will benefit into the future, thank you for investing in our community's "endowment fund."