December 6, 2020 Bulletin Article (Highlight End of Year Gifts)
As you do your tax planning for 2020, we hope you will consider making good use of the income tax charitable deduction. Your year-end gift can significantly reduce your income taxes while providing meaningful support to our Cathedral parish. Regardless of your income, in most cases you can lower the taxes you pay through charitable giving. Please remember that giving is about much more than tax savings. Your charitable gifts make an important difference in what we are able to accomplish here at the Cathedral of St. Johns.
New rules in 2020 incentivize charitable giving. Features in the Federal coronavirus relief bill (CARES Act) include the following:
New Deduction Available: The bill makes a new deduction available for up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions. This is particularly beneficial to people who take the standard deduction when filing their taxes (in other words for taxpayers who do not itemize their deductions). It is calculated by subtracting the amount of the donation from your gross income. It is an “above the line” adjustment to income that will reduce your AGI, and thereby reduce taxable income. If you already made your donation since Jan. 1, that contribution counts toward the $300 cap.
New Charitable Deduction Limits: Also part of the bill allows individuals who itemize to deduct much greater amounts of their contributions. Individuals can elect to deduct cash contributions, up to 100% of their 2020 adjusted gross income, on itemized 2020 tax returns. This is up from the previous limit of 60%. If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.
Qualified Charitable Distributions: The CARES Act did not change the rules around the QCD, which allows individuals over 70½ years old to donate up to $100,000 in IRA assets directly to charity annually, without taking the distribution into taxable income. With a QCD, the custodian of your traditional IRA makes distributions directly to a charitable organization on your behalf. The advantage is that, in addition to not being taxable, the distribution(s) will count toward your required minimum distribution (RMD) for the year so you will pay tax only on the remaining portion (i.e., over $100,000) of the distribution that you receive.
However, under the CARES Act, an individual can elect to deduct 100 percent of their AGI for cash charitable contributions. This effectively affords individuals over 59½ years old the benefits similar to a QCD; they can take a cash distribution from their IRA, contribute the cash to charity, and may completely offset tax attributable to the distribution by taking a charitable deduction in an amount up to 100 percent of their AGI for the tax year.
Thank you for your continued generosity and support of our Cathedral parish throughout this year that has been fraught with difficulties and challenges, not just financially, but spiritually as well. With your support we have been able to serve our church family and continue to spread God’s Word.
December 13, 2020 Bulletin Article (Donation Options)
This is the season we give thanks to God for all He has done for us this past year and throughout our lives. It is also a good time to consider how we might give back some of our wealth or assets to Him with a special year-end gift. Gifting is a great way to thank God for these blessings. Take advantage of the charitable tax deduction for gifts made before December 31. Here is a sample of the variety of gift options available to you. Remember, any gift will make a HUGE difference!
Monetary gifts of cash or check or online donations (bank account, credit card, or SJB website for e-check or credit card and via smart phone app) are always very much needed and appreciated. Please remember that all such donations must be dated prior to or on Dec. 31st to qualify for deductibility in 2020.
Establish a Donor-Advised Fund (DAF). You may want to consider “bunching” deductions into the current tax year as a strategy to increase your itemized deductions. A DAF can help you achieve that goal. You usually need $5,000 to $10,000 to open a DAF at a brokerage firm, mutual fund company or community foundation. As the donor, you transfer money or appreciated stock to the fund and then receive a deduction in the year the charitable donation is made.
Qualified Charitable Donation (QCD). If you’re over age 72 and have an individual retirement account (IRA), a qualified charitable contribution (QCD) may be a more beneficial way to satisfy your charitable giving goals, especially if you don’t have enough deductions to itemize. With a QCD, the custodian of your traditional IRA makes distributions directly to our Cathedral parish on your behalf. The advantage is that distributions paid directly to our parish are not taxable to you and will count toward your required minimum distribution (RMD) for the year. You can direct all or a part of the RMD (up to $100,000 per tax year) to us and you will be taxed only on any remaining portion of the distribution that you received.
Set up a Charitable Life Insurance Policy. A charitable life insurance policy may allow you to provide an estate donation to the Cathedral. You need to arrange a direct transfer by the IRA trustee to the Cathedral by Dec. 31. Remember, payment has to go directly from your IRA to the church. If you receive it, or it’s designated as payable to you, it will count as income.
Donation of Stock. Donating stock to the Cathedral allows you to avoid capital gains tax. This means the church gets the full value of your stock – potentially an additional 37% of your donation! For example, if you own appreciated stock worth $27,400 and you sell it, you may pay $7,400 in capital gains tax, leaving you with $20,000 to give to the church as a tax donation. Instead, you can donate the stock directly to the church. Our church receives the full $27,400 value and you write the full $27,400 value off on your taxes, too! This extra $7,400 will make a big difference to our parish. No matter the size of your donation, giving stock directly typically increases your gift amount by 37%.
In order to receive the best tax deduction, you should donate appreciated stock that you have held for more than one year. You will then get a tax deduction equal to the stock’s fair market value – not what you originally paid for the stock. You’ve already increased your deduction, just by owning this stock!
You might be thinking about transferring a losing stock to the church. In this case, it is better to sell the stock and give the funds directly to the church. This way, you can take the capital loss and still deduct the full cash amount from your
taxes. The church receives the same amount either way.
I hope that the information provided relative to the various gift options is helpful to you in planning your end-of-year giving. Please don’t hesitate to contact me if you have any questions or need further information: 318-221-5296, Ext. 112 or by e-mail at email@example.com.
December 27, 2020 Bulletin Article (End of Year Reminders+Deadline for giving to be counted for 2020 + Incentives because of Covid)
2020 Donation Deadline
Parishioners who want their donation(s) applied to the calendar year 2020 for tax purposes should ensure that their donations are in the church office no later than the weekend of January 9-10, 2021. This deadline is extremely important so that contribution letters can be sent to parishioners on a timely basis.
If a stock donation is part of your year-end giving, please ask your financial advisor to contact Pam in the church office ahead of time to advise us of your plans. We have specific procedures for receiving stock and we want to make sure your donation goes through before the end of 2020.
Please remember the new rules in 2020 made through the CARES Act that incentivize charitable giving:
New Deduction Available: The bill allows an above-the-line deduction of up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions.
New Charitable Deduction Limits: The bill also allows individuals who itemize to deduct much greater amounts of their contributions. Individuals can elect to deduct cash contributions, up to 100% of their 2020 adjusted gross income, on their itemized 2020 tax returns. This is up from the previous limit of 60%. If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.