Charitable and Non-Charitable Giving
The Coronavirus pandemic has changed many things in our day to day lives. This includes where we can work and try to stay safe, how we can try to be upbeat in periods of social isolation and most importantly, how to live with the loss of a loved one to this disease. There is no doubt that this pandemic has left indelible marks on Americans of all ages and from all walks of life.
The Holidays are almost upon us and will bring with them our remembrances of times and people from our past. They also make us give thanks for the people and things we have that help make our lives bearable during the difficult times. It is often during these times that we think about how we can give back to those organizations or people that made a positive difference in our lives.
While who you give to is important, how you give is equally important. Most people would like to benefit as much as possible from provisions in tax law that help reduce their tax liabilities. There are some things you can do to make sure you get maximum tax benefit from charitable giving. These include:
• Make sure the organization is qualified as tax exempt by the IRS before giving. You can use this link to search for types of Charities and Nonprofit organizations:
• When to give – make sure you give your gift by no later than 12/31/20 or earlier to ensure checks are posted by 12/31/20.
• Get a receipt from the organization that shows the amount given and date received.
• If you are unable to itemize deductions and must receive Required Minimum Distributions from your IRA, consider making charitable contributions direct from your IRA to the charity to exclude this amount from your taxable income. You will need the help of your IRA custodian to properly make this donation (Qualified Charitable Distribution).
• Give non-cash gift to charities. These can include items from a garage cleanup that you will no longer use, appreciated stock or other property.
You can give up to $15,000 of cash or property to any one person in 2020 (by 12/31/20) and not be required to file an IRS Form 709 (Gift tax return). A married couple can give up to $30,000 to any one individual. The $15,000 amount is called the annual gift tax exclusion and is indexed for inflation. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value. Although you do not receive a current tax benefit from it, with proper planning it can be a way to reduce your taxable estate upon your death.
If you give more than $15,000 to any one person, then you will be required to file a Gift tax return. Under current tax law, you can give up to $11,580,000 tax-free during your lifetime (2020 figure). However the estate tax exclusion and gift tax exclusion are currently tied together, so if you use a portion of your lifetime gift exclusion, it will reduce your available estate tax exclusion (how much is available at your death).
If you have questions about charitable giving or non-charitable gifting, please contact anyone on the Kimble team.