A message from Harry Levine, President of the Community Foundation of Otsego County
We have only one week left in 2020, a remarkable year that hit us with surprises and painful disease.
But the year had its bright spots too. One of them was the extraordinary efforts by all the front-line medical professionals and other essential workers who risked their own health to serve us. Another is the amazing generosity that poured out from members of our community to help those in need. A third was the extraordinary efforts of our nonprofit sector that rose to meet many challenges with fewer resources.
As the year draws to a close, there are a few days remaining when you might consider gifts to those very nonprofits which performed so well for us all.
Our tax policy rewards those who make charitable donations by allowing donors to reduce their taxable income and save on taxes. But there is a hard deadline of December 31 for taking advantage of some good ideas for 2020.
Here are a few of those ideas:
• Taxpayers who do not itemize deductions are entitled to reduce their taxable income by up to $300 by simply making gifts before the end of the year to qualified charities.
• If you do itemize your deductions and want to donate at least $10,000 but are not yet ready to decide which organizations you want to support, you can establish a donor advised fund and benefit from the tax deduction this year, while deciding later how to allocate your gift.
• Those with IRAs who are at least 70 1/2 can make gifts to charities (up to $100,000) directly from an IRA and the distribution comes out tax free instead of taxable. Be careful, however, as 2020 is a year in which there is no required minimum distribution and the age for starting RMDs has been extended to 72.
• For 2020 only (thanks to the CARES Act), donors are permitted to deduct charitable gifts equal to 100% of their adjusted gross income (compared to the usual 60% for cash gifts and 30% for gifts of appreciated stock).
• Speaking of appreciated stock, this week may be a good time to donate highly appreciated stock (owned for at least 1 year) and save having to pay capital gains tax. But you will need to get any transfer in motion quickly as the year is running to its end.
• A charitable gift annuity is another way to generate a tax deduction in 2020 while securing a fixed annual income. At death, the funds in the annuity go to your designated charity. The charitable deduction is relatively high right now as interest rates used to calculate the amount of the deduction are very low.
Please consult your own tax advisors for specifics on these ideas.
Regardless of whether tax considerations are important to you, this is a great time to show your appreciation for those nonprofits in our community that work tirelessly to help us and our neighbors. Donating today and supporting those organizations would be a very nice way to say thanks for being there for us.
The Community Foundation of Otsego County is here to help you invest in your community. For additional information, contact us at email@example.com.