Each of these options not only offers tax advantages but also can help you make a meaningful difference. Cobb Community Foundation (CCF) can help you customize a solution that works for you.
“There are so many ways to incorporate charitable giving into your year-end planning. Let us help you maximize your charitable impact while maximizing the tax benefits to you at the same time.” – Barbara Garner, Donor Services Manager
Donor-Advised Funds or “Giving Funds”
This is a great way to claim a tax deduction now for supporting your favorite charities in the future. Giving Funds can be created quickly and easily with a gift of $5,000 or more. You can also create your Giving Fund with appreciated stock or mutual funds and avoid paying capital gains tax on the sale while still receiving an immediate charitable income tax deduction for the full value of the asset. Already have a Giving Fund? It’s a great time to add to it!
Giving Funds and Bundling
Some donors opt to bundle or “pre-fund” their giving. This means donating several years’ worth of giving at one time into a Giving Fund, claiming the charitable deduction that year, and then waiting to donate again while claiming the standard deduction in the meantime.
Gifts of Real Estate or Appreciated Stock
Whether you give appreciated assets to a Giving Fund or directly to a public charity, you are able to deduct the fair market value of the asset. While appreciation has an imbedded cost to you (the capital gains tax that would be owed if YOU sold the asset), there is no such imbedded cost to the public charity. If you are thinking about donating any asset that is not publicly traded, however, this will take some time, so get started now!
IRA Qualified Charitable Distribution (QCD)
Although the CARES Act eliminated the minimum required distribution for 2020, an IRA qualified charitable distribution (QCD) is still a great strategy. If you are over 70 1/2, you can transfer up to $100,000 directly from your IRA to charity and avoid having to include it in your income altogether. Not only may this allow you to receive much greater benefit from the standard deduction ($24,800 for married taxpayers filing jointly), it can also help you avoid some of the “gotcha” taxes that come with higher income. What are “gotcha” taxes? The higher your adjusted gross income (AGI), the higher your tax on Social Security, the higher your Medicare premiums, and the greater chance that you will have a higher capital gains tax rate or that the 3.8% tax on investment income (“NIIT”) will affect you.
You and your spouse, provided you are both over 70 1/2, can each gift up to $100,000 from your respective IRAs. Unfortunately, donor-advised funds are not eligible for QCDs, but other types of funds at Cobb Community Foundation are, including the Cobb COVID-19 Community Response Fund.
Let us help you determine what makes sense for you!