December 2020

Between November 1^st and mid-December, my mailbox is filled with letters and requests for charitable donations before the end of the year.  It is the big push for many non-profit organizations, and the time when most people give.  Often, we are feeling charitable around the holidays, or we want to make sure we meet that goal for a possible tax break. Whatever the reason…tis the season for mailing overloads. 

I have to admit that I have been on the sending end of the letter requests as well for some of the non-profit boards that I have served on or are currently serving.  I like to send a note of appreciation, especially if it is someone I know.  Do you receive a lot of mailings this time of year too?

With clients who are charitably minded, Cliff and I work with them to identify giving options that fit their needs.  Some people enjoy writing that personal check and send it to their preferred organization at their leisure, but there are other ways you can give, that might offer you some tax benefits.

Did you know that if you are over age 70 ½ you can give directly from your IRA account to a 501(c)(3) organization? When you give this way, you don’t have to pay any income tax on the amount withdrawn from your IRA and given directly to the organization. It’s called a Qualified Charitable Distribution (QCD for short).  You can give up to $100,000 this way each year.

Cliff and I also talk to clients about giving via a Donor Advised Fund when it is appropriate.  A donor advised fund is almost like having a mini-foundation set up for you to make ongoing grants to qualified organizations.  Raymond James has a Donor Advised Fund that can be established.  With the recent increase of the standard deduction on your taxes, this can become a way to bundle your donations and still receive a tax benefit.  In addition, it might also make sense for you to move appreciated stock into this fund rather than cash to help avoid any realized capital gains tax.  Cliff and I can discuss this with you and your tax advisor if it is right for you.

Typically, charitable contributions can only be deducted if taxpayers itemized their deductions. However, for 2020, as part of the CARES Act that was passed in March, taxpayers who don't itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific or literary in purpose.  Nice!

There are many ways to be charitable and give during this time of year, and these are just a few that can work in tandem with your investments and taxes.  Let us know if you want to hear more about how these options would work for you.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.