As you and your tax planning professionals consider your year-end tax strategies, here are some opportunities we hope you will consider:
The CARES Act (the Coronavirus Aid, Relief, and Economic Security Act), passed in 2020, included several charitable tax provisions to encourage Congress has extended these provisions for 2021 including:
- A deduction for charitable donors who do not itemize when filing their tax returns. If you do not itemize but make a cash gift to charity, you will be allowed to tax a special tax deduction, up to $300 ($600 for joint filers), to reduce your tax liability.
- An increase in the deduction limit up to 100% of a donor’s annual income for cash gifts (previously the deduction was capped at 60% of annual income). If you make a gift, you will be able to deduct more this year.
- This is set to expire on December 31, 2021, so act now.
If you have a Donor Advised Fund (DAF) and wish to help us this year, you can make a gift from your DAF to support our work without affecting your personal financial security.
A charitable gift of appreciated stock (or mutual fund shares) by December 31 can make perfect sense. You are given the opportunity for a two-fold tax saving. First, you avoid paying any capital gains tax on the increase in value of your stock. Second, you receive a tax deduction for the full fair market value of the stock. For income tax purposes the value of such gifts may be deducted up to 30% of adjusted gross income, with an additional five-year carry forward.
An IRA Charitable Rollover allows those 70½ and older to donate as much as $100,000 of IRA account assets each year directly to one or more public charities, such as OΔK. The donations will count as part of the IRA owner’s required annual payout.
- To qualify, the donation of the IRA assets must be made directly to a charity, not a donor-advised fund or grant-making foundation. The assets must be transferred directly to the charity from the IRA custodian, such as a bank or mutual fund.
If you own a life insurance policy that is no longer needed, consider it as the perfect vehicle for a 2021 year-end charitable gift.
- To receive a charitable deduction, name OΔK as both the owner and beneficiary of the policy. If the policy has a cash value, you can take a charitable deduction approximately equal to the cash value or the adjusted basis.
- In addition, if annual premiums are still to be made and you continue to pay them, those premiums will become tax deductible each year.
If you would like to support our cause with a charitable bequest, we can help. Please contact us for a copy of our free estate planning guide. We can provide you with a copy of our bequest language and estate planning attorney referral list. Please contact us for assistance with creating and updating your estate plans.
No one publication can tell you everything you need to know about 2021 year-end gift opportunities and which method would be the most advantageous for your particular situation. Be sure to check with your accountant or other tax advisor for additional information on how these general rules apply to your situation.
We appreciate your continuing interest in supporting the Society. We would be pleased to discuss the options with you if you have any specific questions. Please contact Jennifer L. Waller by email (firstname.lastname@example.org) or by phone (540.458.5340).