There have been a few changes that impact charitable giving deductions and tax implications this year. In light of these changes, we wanted to share some updates to help you find what works best for you as you consider making gifts to support the nonprofits you love. And if you love the Land Trust, we hope you’ll consider making a gift to support our mission.
SECURE Act
At the end of December 2019, the SECURE Act was signed into law. Among other things, this law pushes back the age of Required Minimum Distributions (RMD) from 70.5 to 72. How could this impact you? If you turn 70.5 after Jan 1, 2020, you won’t be subject to Required Minimum Distributions until you turn 72.
Retirees will have an additional year and a half to contribute to an IRA. IRA balances will have the opportunity to collect compound interest for another year and a half. This means IRA balances could increase. A higher balance means that the Required Minimum Distribution may also be greater – a blessing and a curse – higher RMD’s means more money for the retiree however, it also may mean more taxes. In addition, IRA inheritors may be required to take full distribution within 10 years, which could expose them to a much higher tax bill.
Making a Qualified Charitable donation through your IRA could help reduce your (or your family’s) tax exposure. Here’s how:
- If you are 70.5 year old, you are still Qualified Charitable Distribution (QCD) eligible, and it still may be beneficial to give. While the SECURE Act changed the minimum age for RMDs, it did not change the minimum age for QCDs. Giving a QCD before turning 72 may help you lower your eventual Required Minimum Distributions, so it may still be beneficial to withdraw.
- If you are turning 72, and are now required to withdraw a distribution you may want to consider a Qualified Charitable Distribution.
- If you are concerned about the tax implications for your heirs, you may want to consider designating your favorite charities as beneficiaries or partial beneficiaries of your IRA
CARES Act
Take advantage of charitable deductions made possible by the CARES Act. Contact your tax advisor for more details.
- For 2020, taxpayers who do not itemize their deductions are allowed to take a one-time deduction of up to $300 for cash gifts made to charitable organizations, such as the Land Trust.
- Limitations on charitable contributions by individuals who itemize has been increased from 60% of adjusted gross income to 100% and for corporations from 10% to 25% of taxable income. Contributions to donor-advised-funds are excluded.
If you are interested in supporting the Land Trust and would like to discuss your options, please let us know at hallie@landtrustnal.org or 256-534-5263. Learn more about the variety of ways you can support the Land Trust of North Alabama.
*As with all financial decisions including charitable donations please talk to your financial advisor for the most accurate and up-to-date information.