Dig into holiday spirit to help on-the-ground organizations

By Andrew Zashin

Year-end giving is a philanthropic tradition that holds special significance as the calendar draws to a close. As the final months of the year unfold, individuals, corporations and foundations often reflect on their achievements, growth and the impact they can make on the world. This introspection often culminates in a surge of generosity and charitable donations, collectively known as year-end giving.

Aside from altruistic reasons for giving, there are also other more practical considerations as well.

One of the primary reasons for the increase in charitable contributions toward the end of the year is the holiday season, and with it, the holiday spirit. Tax planning is another great motivator for year-end giving. Specific advantages vary depending on a particular individual’s circumstances, but charitable giving can create a win-win for both the giver and recipient. Some individuals may also benefit from giving for estate planning objectives. Whatever the reasons, giving might create opportunities for the giver.

The festive season, marked by holidays like Thanksgiving, Chanukah and Christmas, fosters a sense of compassion and goodwill. Many people are inspired to share their blessings with those who are less fortunate, making it a time when charitable organizations experience heightened support. The act of giving during the year-end becomes a way for individuals to spread joy, hope, and make a positive difference in the lives of others. Now, especially, during this time of crisis and conflict, it is more imperative than ever for individuals and entities to tap into this holiday spirit and support those in need.

Donations to on-the-ground organizations in Israel and Gaza play a vital role in providing immediate relief and assistance to those innocent victims affected by the conflict. These organizations depend on financial contributions to deliver essential services, medical assistance and humanitarian assistance.

By donating to these organizations, you can give children, families and soldiers hope in the face of uncertainty regarding their loved ones, livelihood and safety. Your donations enable organizations to respond swiftly and effectively to the urgent needs of these communities, providing a lifeline to individuals who may be struggling to meet their basic needs.

Consider the following organizations when making donations this holiday season:

  • Magen David Adom: A donation to MDA, Israel’s national emergency service, helps purchase equipment for the rescue teams on the front lines and on the battlefields, directly in the face of danger. Donations are used to purchase ambulances, medical equipment, protective equipment, bandages and other equipment that helps save lives.
  • Israel Emergency Aid: Israel Emergency Aid is an Israeli organization committed to ensuring that every fighter has the necessary combat and defense gear they need to triumph over terrorism.
  • Friends of the Israel Defense Forces: Friends of the IDF is an organization authorized to provide for the welfare of soldiers in the IDF.
  • Jewish Federation of Cleveland: The Federation has launched its Israel Emergency Campaign to help provide immediate assistance to victims of Hamas’ terrorism and their families.

This article originally appeared as a column for the Cleveland Jewish News.

One of most giving times of year upon us

By Andrew Zashin*

While Giving Tuesday has come and gone, it is still a wonderful time of year to give to charity. There are several ways to contribute this year and a handful of tax provisions that you should be aware of before you do.

As a result of the most recent stimulus package, the Consolidated Appropriations Act, 2021 and handful of significant provisions in the 2020 CARES Act related to charitable contributions were extended through 2021.

One of these noteworthy extensions is the “above-the-line” deduction for charitable contributions.

If you elect to take the standard deduction this year, you can once again deduct up to $300 ($600 for a married couple) from your adjusted gross income if you make a qualified cash contribution to a public charity. By lowering your adjusted gross income, you reduce your taxable income and thereby reduce your federal tax obligation.

If you itemize your deductions, you are once again permitted to deduct financial donations up to 100% of your 2021 adjusted gross income. Accordingly, a taxpayer who itemizes deductions could conceivably donate 100% of their adjusted gross income to public charity and thus owe zero income tax for the year 2021.

Filers who itemize their deductions may also want to consider giving appreciated securities to charity instead of cash this year.

Given the stock market’s solid run, the majority of securities have appreciated over the past 10 years. If you were to sell these appreciated stocks, they would be subject to capital gains taxes. The amount you owe in capital gain taxes depends on whether you’ve owned the shares for more than one year or less than one year and also on your total annual income.

However, if you donate the stock directly to a charity, you can avoid paying capital gain taxes assuming it’s a tax-exempt nonprofit. In other words, the donation allows you to avoid paying taxes on the increased value of the stock and thus reduce your taxable income. As an added bonus, the charity also avoids taxes when they sell the donated investment.

The tax-deduction limit for gifting stock to a public charity is up to 30% of your adjusted gross income, though you can carry any excess over for up to five years.

To donate stock to charity, you’ll first want to find whether the receiving charity has a brokerage account that can accept gifted stock. To obtain this information, contact the charity directly or visit the charity’s website.

People over the age of 70½ have another tool to use when it comes to charitable donations of up to $100,000 per year.

The Tax Act of 2017 made qualified charitable distributions permanent. These distributions do not need to be reported on the taxpayer’s Form 1040. But the money must go directly from the person’s IRA to the charity. This means that the tax payer cannot transfer the distribution to their bank account and subsequently donate cash to the charity.

Most importantly, before you make any financial contribution to a charity this year, make sure you research the organization prior to your commitment. Happy giving.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:06-05:00December 16th, 2021|Charitable Donations, Deductions, Planned Giving|

Charitable deductions listed for 2020

By Andrew Zashin*

When Congress passed the Coronavirus Aid, Relief and Economic Security Act in late March, media attention focused primarily upon newly-created stimulus funds and expanded unemployment benefits. As a result, the CARES Act also temporarily expanded the tax benefits associated with charitable contributions for the individual taxpayer.

Traditionally, taxpayers fell into one of two categories with respect to the financial implications of making charitable contributions: those who elected to use a standard deduction and those who itemized their deductions. In years past, the standard deduction taxpayer did not receive a tax benefit for contributing to a public nonprofit or charitable organization.

In other words, while the standard deduction taxpayer contributed to a meaningful public organization of their choosing, said donation provided no financial benefit to the taxpayer because the donation did not reduce the tax-payer’s adjusted gross income. Conversely, taxpayers who itemized their deductions were able to make deductions for charitable cash donations but only up to 60% of their AGI.

So what has the CARES Act done with respect to charitable contributions? Standard deduction taxpayers may now deduct up to $300 per taxpayer ($600 for a married couple) from their AGI if they make a qualified cash contribution to a public charity during 2020. By the taxpayer lowering their AGI, the taxpayer reduces their taxable income and thereby reduces their federal tax obligation. The benefit increases for taxpayers who itemize their deductions. Itemized deduction taxpayers are permitted to deduct donations up to 100% of their 2020 AGI. Accordingly, a taxpayer who itemizes deductions could conceivably donate 100% of their AGI to public charity and thus owe zero income tax for the year 2020.

It is important to note that restrictions do apply and should be carefully considered before donating. First, contributions of non-cash property do not qualify under the CARES Act. Further, the contribution in question must be made to a public charity. Public charities include foundations organized or created in the United States and operated exclusively for charitable, religious, educational, scientific or literary purposes.

What is not included? For the most part, donating to family foundations, corporate foundations and private non-operating foundations will not provide taxpayer with a qualifying charitable deduction under the CARES Act. If you are unsure whether the charity you wish to donate to is a public charity, you can easily check by accessing the Internal Revenue Service’s charities and nonprofit page by visiting bit.ly/33Fqtdc.

Resources such as the aforementioned website should be carefully utilized and consulted when making a decision regarding charitable contributions. For example, illegal and fraudulent charities do exist and have been created simply to scam well-intentioned donors. A common scheme includes the creation of an organization with an intentionally similar name as a legitimate charity in an effort to fool unsuspecting donors to contribute to them. For example, while Black Lives Matter is a legitimate public charity, the Black Lives Matter Foundation is not a public charity.

While the notion of charity in itself is an excellent reason to donate to the cause of your choice, the tax benefits provided under the CARES Act provide additional incentive to individuals. If you plan on making a financial donation and wish to maximize the tax benefits afforded under the CARES act, make sure you do so wisely by researching the organization prior to your commitment.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:08-05:00September 23rd, 2020|CARES Act, Charitable Donations, Deductions|
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