As the May 17 tax deadline nears, tax-wise giving is on our supporters’ minds. Here is a roundup of all the most common tax-smart ways to give today, tomorrow, and through retirement PLUS an update on 2021-specific deadlines!
Giving appreciated securities:
If you’re interested in giving an appreciated asset that you have owned for at least one year, it could be a great gift for you and PIH! This method allows you to avoid capital gains taxes and receive a tax deduction equal to the full fair market value of the asset. Learn more: www.pih.org/stock
Tax-free gift from an IRA account:
A qualified charitable distribution (“QCD” or “IRA charitable rollover”) allows you to make a tax-free gift of up to $100,000 to Partners In Health from your IRA if you are 70½ or older. This gift will count toward your required minimum distribution, and will not be taxable income. Learn more at www.pih.org/IRA or give today at freewill.com/qcd/pih
“I don’t need this money. I don’t need to pay taxes on it. I already give to charity; why not use the distribution for philanthropy?”
– Anonymous PIH supporter
It’s as simple as requesting a change of beneficiary form from the company holding your assets (i.e. IRAs, 401(k) and other retirement plans, bank accounts, annuities, life insurance policies, donor advised funds, etc.) and including PIH as a full or partial beneficiary. Beneficiary designation may reduce income taxes and possibly estate taxes for your loved ones. Learn more: www.pih.org/designation
Gifts by will:
A charitable gift from your estate is a simple way of giving that enables you to achieve your personal goals and help PIH respond to future global health needs. This flexible gift option can be revised at any time, and can be made as a specific amount or a percentage of your estate— allowing you to also take care of your family. Learn more: www.pih.org/estate or create a will for free in 20 minutes or less today: https://www.freewill.com/pih
Gifts that pay you income:
A simple annuity contract allows you to make a gift to PIH and receive income for the rest of your life. Learn more: www.pih.org/CGA or connect with our gift planning team for a personalized illustration today!
SPECIAL 2021 INCENTIVES FOR GIVING:
Congress has provided several economic incentives to help address the far-reaching effects of the COVID-19 pandemic, including additional tax incentives to encourage charitable giving. We would like to bring to your attention temporary tax rules for charitable giving enacted by Congress late last year as a part of the Consolidated Appropriations Act of 2021. Note that these incentives are temporary and are scheduled to expire at the end of 2021.
If you itemize deductions:
For the 2021 tax year, you may deduct cash contributions to Partners In Health and most other public charities to offset up to 100% of your income. Ordinarily, the income tax charitable deduction for cash gifts is limited to 60% of your income. This 100% limit allows especially generous supporters to reduce their federal income tax to zero. If a supporter wants to donate more than 100% of their income, they can carry forward unused cash contribution deductions for up to five years.
For example: a supporter with an adjusted gross income of $1 million could donate $1 million in cash to PIH and receive a federal income tax deduction of $1 million.
This time-limited benefit only applies to gifts to PIH or other public charities. It is not applicable to gifts to donor advised funds or supporting organizations.
The 100 percent limit is reduced dollar-for-dollar by other itemized charitable deductions. This means that in 2021, a donor who deducts 30 percent of their AGI in long-term appreciated property gifts (i.e. taxable securities gifts or gifts of real estate) will be able to also deduct up to 70 percent of AGI for qualified cash gifts—a total deduction of up to 100 percent of AGI.*
If you take the standard deduction:
If you do not itemize your deductions, you can reduce your taxable income by up to $300 (or $600 for married couples filing jointly) in 2021 for contributions of cash to public charities.
Qualified charitable distributions from your IRA are still a great way to make contributions if you are 70½ or older. Many donors may find the IRA QCD a tax-wise option beginning at age 70 ½, though (as of January 1, 2020) required minimum distributions (RMDs) are not required until age 72. Give from your IRA today or download the forms you need to complete your gift offline at freewill.com/qcd/pih.
* It may not be the tax-wise choice to deduct up to 100% of your income. Because federal income tax rates are progressive, it is not a given that it will be to your advantage to deduct 100% of your cash contributions. Check with your financial or other advisors to determine whether the 100% deduction makes sense for your specific circumstances.
Because everyone’s situation is different, we encourage you to seek professional legal, estate planning, and financial advice before deciding on a course of action. This information does not constitute legal or financial advice and should not be relied upon as a substitute for professional advice.