During the holiday season, many people look for ways to combine their desire to help causes they believe in with their desire to save on taxes.
The Rogers State University Foundation is a charitable foundation with the sole purpose of advancing the mission of the University, primarily through scholarships, but also through support for academic programs and improving facilities. During the last fiscal year, 456 students received privately funded scholarships through the Foundation.
Generally, if you itemize your deductions, making charitable contributions can decrease your tax bill. Here are some strategies to consider that can help you make the most of your giving this year.
Take advantage of the CARES Act
Through the end of 2021, you could consider a strategy from a CARES Act provision that allows individuals who don’t itemize to claim a deduction for a charitable cash contribution up to $300 ($600 for those married filing jointly). In addition, for those who do itemize and are planning on very large cash gifts, the CARES Act has temporarily raised the annual limit on charitable deductions from 60% to 100% of their adjusted gross income.
Give long-term appreciated securities, rather than cash
Donations made by cash or check are, by far, the most common methods of charitable giving. However, contributing stocks, bonds, or mutual funds that have appreciated over time has become increasingly popular in recent years, and for good reason.
Most publicly traded securities may be donated to the RSU Foundation. If the security has been held for more than one year when the donation is made, the donor can claim the fair market value as an itemized deduction on their federal income tax return (assuming they itemize their deductions). The amount deducted in a single year can be up to 30% of the donor’s adjusted gross income. No capital gains taxes are owed when the securities are donated and not sold.
Over 72? Consider a Qualified Charitable Distribution (QCD) from an IRA
If you are at least age 72, have an IRA, and plan to donate to charity this year, another consideration may be to make a QCD from your IRA. This action can satisfy charitable goals and allows funds to be withdrawn from an IRA without any tax consequences.
QCDs may be particularly appealing if you have few other itemized deductions or if you are already close to your charitable deduction limitations. Because the tax-free QCD is never reported as income or as a deduction, it is not counted against the charitable limits and does not require itemization to be effective.
Before undertaking any of these giving strategies, you should consult your legal, tax, or financial professional. The RSU Foundation welcomes the opportunity to discuss giving strategies, including estate planning and non-traditional forms of giving, such as gifts of real estate, precious metals and other hard assets.
– Steve Valencia, Vice President for Development