Tis the season of gifting! Here are three ways to make the most of your charitable contributions. Your generosity and gifts to charity can go a little further or help you by utilizing one or more of these tax strategies.
1. Make A Qualified Charitable Distribution: A qualified charitable distribution is for IRA account holders over the age of 70½. These owners may distribute funds out of their IRA as a direct gift to charity. These gifts made directly, will exclude the distribution from their taxable income. This is beneficial in two ways; it exudes the distribution from ordinary income tax of the giver and fulfills the required minimum distribution (RMD) for those over the age of 72 (RMD’s are not applicable in 2020).
2. Gift Appreciated Shares of Stock: Gifting appreciated stock directly to charity is another way to eliminate your tax liability. By gifting stock directly to charity, one can eliminate their capital gains tax with a gift of stock.
3. Cares Act Provisions: Lastly, for those who do not itemize, charitable donations up to $300 is an above the line tax deduction for 2020! For those who do itemize (and are extremely generous) the 60% cap of adjusted gross income has been increased to 100%.
I hope these tips help you understand that you may be able to be more charitable than you thought. Happy holiday season and be well!