Thank you for being a supporter of Fred Hutch. As you may know, many nonprofits vital to our community are reeling from the impact of Covid-19. The good news: There are many options as to what to give and how to give to support them. And recent tax law changes make it easier to give more in 2020. Here’s a roundup of tax-wise strategies for supporting Covid-19 research, response and other charitable causes.
Cash Giving: New Incentives in the 2020 CARES Act
Quick and easy deduction for charitable giving. Donate up to $300 in 2020 and you can deduct that amount when you do your taxes, in addition to your normal standard deduction. Your gift must be in cash — including via check and credit/debit card. The $300 deduction applies to each tax return filed, so a married couple filing jointly gets the same $300 deduction that a single tax filer does. Non-cash gifts (stock, clothing, etc.) do not qualify, and neither do your donations to donor-advised funds or private foundations.
Higher maximum deduction for charitable giving. In tax year 2020, if you itemize deductions you can give cash gifts of up to 100% of your adjusted gross income (AGI) to charities and claim a tax deduction for the entire amount. (In the past, you could deduct donations up to 60% of your AGI). Like the deduction discussed above, this expanded deduction applies only to cash gifts to public charities, not donor-advised funds or private foundations. If your donation is higher than your AGI, you can deduct the excess amount in future years. This expanded giving opportunity is for 2020 and may not be available for 2021.
Other Ways to Give: Stocks and Other Assets
Giving securities. Donating stock or other assets that have gained in value since you bought is a great way to give and also tax-wise. If you itemize deductions, your donation is the value of the security, and you don’t recognize the capital gain. The nonprofit can then sell the security and use the proceeds as needed. PLEASE NOTE: If you have a loss on the security since you bought, you are better off selling the security and giving that cash to the charity. This way, you can use the loss to offset any capital gains you might have in 2020 or in future years.
Donations from retirement accounts. For those age 72 and over, required minimum distributions (RMDs) from IRAs will not be required for 2020, thanks to the CARES Act. However, if you are over age 70 1/2, you can still give up to $100,000 directly to charity from your IRA and get the benefits of a tax-free distribution from your IRA while providing a much appreciated shot in the arm for your favorite charitable organization.
Tapping your Donor-Advised Fund (DAF). If you already have assets in a donor-advised fund, now is a great time to make donations. That’s especially true if your other sources for giving are not as accessible during the current economic downturn. Many nonprofits essential for a healthy and vibrant community, from hospitals to arts organizations, are in dire need of cash given the restrictions on their operations.
Blog Posts about Giving
Papers about Giving
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