CARES ACT offers substantial tax breaks
Thanks to rare opportunities offered by the Coronavirus Aid, Relief and Economic Security (CARES) Act, you might be able to give more to charity in 2020... and save on taxes while doing it. We've compiled giving strategies that might work for you so you can save big and give more.
By taking advantage of this unique opportunity, only available before December 31, 2020, you can make a huge impact on Jewish Family Service and benefit financially.
FOR THOSE WHO ITEMIZE:
For those who do itemize their deductions, the new law allows for cash contributions to qualified charities, such as the JFS Foundation, to be deducted up to 100% of adjusted gross income (AGI), up from 60% previously. The new deduction is only for cash gifts that go to a public charity; it does not apply to contributions to a donor advised fund or non-operating private foundations.
You might also consider generating cash and decreasing taxes by:
Selling depreciated securities that have declined in value below their cost. You could then realize the capital loss and contribute the cash.
Using a capital loss to offset gain on sale of appreciated assets, thereby avoiding capital gains taxes and using the cash proceeds to make a charitable gift without a percentage limitation.
Selling appreciated securities. While you would recognize a capital gain, you could donate the sale proceeds to eliminate taxation of ordinary income.
Additionally, if your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. Charitable contributions in excess of your income can be carried forward for five years subject to the 60% of AGI limit in those years.
FOR THOSE WHO TAKE THE STANDARD DEDUCTION:
The CARES Act allows all taxpayers to take a charitable deduction of up to $300, even if you do not itemize. In plain English, if you donate up to $300 in cash to a qualified organization like the JFS Foundation, your AGI will be reduced by up to $300—and you can still claim the standard deduction.
A gift of this size can still go a long way in supporting the JFS Foundation and in turn, mental health and social services provided by Jewish Family Service. Looking for the perfect holiday gift for the person that has everything? You can even choose to make your gift in honor of a loved one.
REQUIRED MINIMUM DISTRIBUTION CHANGES:
The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This probably comes as a relief to many of you who would have had to withdraw a greater percentage of your retirement accounts. Donors can use their RMD to make a gift from their IRA. If you are 70½ or older, you can still make a gift from your IRA or name the JFS Foundation as a beneficiary.
Additionally, the 2020 tax year expansion to the 100% AGI deduction limit creates the option of withdrawing funds and contributing a larger amount to charity, plus taking a charitable deduction to offset the taxable withdrawal.
Check with your financial advisors to see how these rules apply to your plan and situation.
Please contact Cathy Barker, Chief Executive Officer at firstname.lastname@example.org or 469.206.1645.