BEQUESTIONS WITH KELLIE SMITH

By Kellie Smith, Jewish Federation & Foundation of Northeast Florida

“Why is year-end charitable giving so important this year?”

Year-end giving may require some additional planning in 2020, and now is the time to decide who will be receiving your charitable contributions. The global Covid-19 pandemic has greatly affected charitable organizations in various ways, so it is especially important that you don’t wait until the last minute. There is a bigger tax deduction for charitable donations in 2020.

The pandemic’s devastating financial impact on low-income communities has created an increased strain on nonprofit resources as charities stretch their dollars to serve more people. Some long-established charitable organizations have directly responded to the pandemic by starting their own emergency Covid-19 programs, such as food pantries expanding their services to meet the greater need. Given this year’s unprecedented circumstances, you may want to give extra consideration when deciding where your donations will have the greatest impact. Doing things at the last minute is stressful – and we’ve already had plenty of stress this year. No matter how much you give, know that every gift counts and all gifts are needed more than ever.

While laws have shifted around Required Minimum Distributions (RMD) and Qualified Charitable

Distributions (QCD) requirements, 2020 also has ushered in many other changes to tax law in relation to charitable giving. The COVID-19 pandemic and resulting CARES Act, the $2.2 trillion economic stimulus bill passed in March, made some modifications that are intended to incentivize Americans to give.

The CARES Act allows individuals and corporations to deduct a higher percentage of income for charitable donations, so you can give more and save more on taxes. This new tax rule applies only to the year 2020, and there are certain guidelines, so you should consult your tax advisor for details. The CARES Act allows you to deduct up to 100 percent of your gross adjusted income for people who itemize deductions. Normally, this deduction is limited to 60 percent of adjusted gross income. Meanwhile, corporations can deduct up to

25 percent — up from 10 percent — of their taxable income if used for charitable giving. In addition, thanks to the CARES Act, for those who don’t itemize their deductions, there’s a new “universal deduction” that allows for a charitable deduction of up to $300 per person. These new benefits pertain only to cash donations. Property and other physical assets don’t qualify. In short, end of year giving is more important than ever. Decide which causes are most meaningful to you, give what you can, take advantage of the incentives and focus your contributions to make the maximum impact.

This column is for informational purposes only and should not be construed as legal, tax or financial advice. When considering gift planning strategies, you should always consult with your own legal and tax advisors.