Act now for expiring 2020 tax benefits

By Alison O’Carroll, JD, MBA, director and philanthropic counsel 

Every year I am surprised when the year-end arrives. How can that be? Where did the year go? All of a sudden, those items I had been putting off until “later” need to be taken care of. Sometimes that even includes my charitable gifts for the year.

If this describes you as well, be reassured that while time is running out for this calendar year, it’s not too late. Keep in mind:

• Mailing a check? A postmark of December 31 counts.
• Wire transfer? Must be received by the Community Foundation by December 31. Transfers can usually be done within 1-2 days.
• Stocks or mutual fund shares? Also must be received by December 31. Given the time of year, this might take 3-4 days.

2020-only tax benefits

Saving on taxes is not why you give but it can help your budget or allow you to give more. There are two key tax incentives available only for a few more weeks that may be helpful to you.

Deduct up to 100% of AGI. The usual cap on the deductibility of charitable gifts is raised to 100% of adjusted gross income.

$300 above-the-line deduction.  Even if you do not itemize on your tax return, you can take a charitable deduction of up to $300.

In both cases, the gift(s) must be cash and made to a public charity like the Community Foundation. While gifts to donor advised funds do not qualify, contributions to other funds at the Foundation, including the Greater Atlanta COVID-19 Response and Recovery Fund and our Community Grant-Making Fund, do qualify.

Other tax-wise giving strategies

These giving strategies will live on beyond 2020 but can also help in giving this year.

Appreciated stock and mutual fund shares. Receive a deduction at full value (if owned for over a year) and pay no capital gains taxes on the appreciation. Use cash to replace holdings you want to retain.

Charitable IRA Rollover. If you are age 70½+, you can make a gift directly from your IRA to a public charity like the Community Foundation. The distribution will not count in your taxable income, giving you the benefit of a deduction and other possible tax savings.

Bunch your gifts.  Make a gift multiple times the size of your annual giving into your donor advised fund. This can allow you to exceed the standard deduction in 2020 and benefit from a charitable gift deduction. With a DAF, charitable grants can then be made over time, in accordance with your usual giving schedule.

To learn more about these giving strategies and possibilities, please contact your advisor or feel free to reach out to me. I would be happy to assist you!

My contact information is aocarroll@cfgreateratlanta.org or 404.333.0241.