Editor's Note: This is a guest post on the Grey Matters Blog and not written by anyone affiliated with Grey Muzzle. We allow guest contributors from time to time in order to provide our supporters with a wide range of topics of interest.
Americans are facing job losses at unprecedented rates and financial hardship at alarmingly high levels. If ever you were considering an opportunity to make a positive impact for those in dire circumstances – individuals, small businesses, churches, nonprofits, including animal welfare organizations, now is the time.
Several opportunities exist so you can leverage your gifts in meaningful ways:
1. Cash. The recently passed CARES Act strongly encourages giving. In 2020, you can give up to 100% of your Adjusted Gross Income (AGI). This is up from the previous level of 60% of AGI. Effectively, that means you can potentially eliminate your entire tax liability through “qualified charitable contributions,” which are contributions to public charities and non-profits known as 501(c)(3) organizations. Furthermore, if you give above the 100% of AGI threshold, the excess amount may be carried forward as a charitable contribution on future tax returns for up to 5 years. Consideration: Even if you cannot give at that level, consider donating your stimulus check if someone else would benefit from it more than you.
2. Qualified Charitable Distributions (QCDs). If you are at least age 70.5, you have a unique opportunity to give from your IRA account in the form of QCDs (certain exclusions apply). QCDs are gifts given directly to public charities from your IRA. Up to $100,000 per person may be given tax-free, but you may not also claim the QCDs as itemized charitable deductions. In other words, money you earned, which grew tax deferred over the years, can go to charities without being reduced by taxes. Additionally, Required Minimum Distributions are not required this year due to CARES Act legislation, but you could decide to take your IRA distribution and donate it via a QCD.
3. Donor Advised Funds. Do you own appreciated securities that, despite the market downturn, are so highly appreciated that you would owe a significant amount of taxes if you sold? Consider donating them to a Donor Advised Fund (DAF). The value of the donated securities is a charitable contribution for tax purposes. Then the DAF will sell the donated securities without a tax liability, which allows you to make a greater charitable impact with the proceeds. You may direct the proceeds to support public charities you desire. Note contributions made to DAFs are irrevocable and will not be refunded.
4. Other Ways to Give. Consider doing what you can – adopt a pet, sew masks at home to donate to healthcare providers, or make meals for those in need. Be creative. Is there something you can do with your gifts and talents to raise money? Did you hear about Captain Tom Moore, a British WWII veteran who turns 100 at the end of this month? If not, Google his story. He pledged to walk 100 laps around his property, using his walker for balance. His appeal went viral and he raised $16M for the benefit of healthcare workers at the National Health Service. If he can do something like this, so can we.
About the Author: Trent Templer, CFP, is the Founder and President of Templer Wealth Management, a Registered Investment Advisor that practices comprehensive financial planning as a fee-only fiduciary to its clients. The contents herein are for informational and education purposes only and should not be construed as personal investment, financial, tax, or legal advice. TWM does not provide tax or legal advice. You should contact your tax advisor and/or attorney before making any decisions with tax or legal implications.