By Ellen L. Baker.
This has been a difficult year for many people and charities have been stretched thin. Charities are dependent upon our generosity. It is more important than ever for us to be charitable this year, and from a tax perspective 2020 is a good year to make gifts to charity.
The CARES Act included changes to charitable giving rules for 2020 for both taxpayers who itemized and for those who do not. Taxpayers who do itemize can benefit from a tax deduction of up to $300 for a cash donation to a public charity (other than a donor advised fund or a supporting organization). The tax benefit that is available for those who do itemize is even greater. Such individuals can deduct 100% of their cash gifts to a public charity in 2020 (other than a donor advised fund or supporting organization).
For those who are over 701/2, qualified charitable distributions from an IRA up to $100,000 are still allowable in 2020 even though the required minimum distribution rule was suspended. The amount given to charity is not included in your taxable income. Married couples who file jointly can transfer up to $200,000 from IRAs. This rule applies even if you do not itemize. Although there is no direct income tax benefit for such gifts in 2020 it can benefit an overall estate plan by reducing one’s taxable estate.
The most important thing to remember is that you need to make your charitable gifts on or before December 31, 2020 in order to receive these tax advantages.
Be sure to consult with your tax and legal advisors to determine which charitable giving and estate planning options are best for your situation. If you have questions or would like to learn more about various charitable options or update your estate plans, please call us at McCabe & Mack LLP. We would be pleased to help you.
If you have any questions, please feel free to reach out to me personally at 845-486-6850 or by email.
Ellen L. Baker, Of Counsel to McCabe & Mack LLP, is a graduate of Union College and Albany Law School of Union University. She has more than two decades of experience helping clients with their estate planning, estate and trust administration and elder law needs. A member of the National Academy of Elder Law Attorneys and the Hudson Valley Estate Planning Council, she also serves as Chair of teh Dutchess Community College Foundation, a board member with the Community Foundations of the Hudson Valley, and as a Lifetime Honorary Member of the Anderson Center for Autism/Anderson Center Services. She is a member of the Poughkeepsie/Arlington Rotary Club.
Ellen and her husband Jim reside in Poughkeepsie. They have three grown children and a beautiful grandson. In her free time, Ellen enjoys reading and traveling.