Hudson Community Foundation donors are generous year-round, but tax considerations are an important factor in leveraging giving. Recent tax legislation, including the 2017 Tax Cuts & Jobs Act, the 2019 SECURE Act and most recently the 2020 CARES Act to address the far-reaching effects of the COVID-19 pandemic, all provide different tax incentives for your charitable giving. Some specific strategies to consider and discuss with your financial advisors include:
Setting up a new fund
If you are interested in setting up a fund with Hudson Community Foundation, . Call to discuss your charitable goals with a member of HCF's professional staff to decide which type of fund is best for you and your family. The date of the gift transfer to HCF is most important: it will determine whether your gift qualifies for a 2020 tax deduction.
Recent increases to the standard deduction limits have highlighted a strategy using donor advised funds (DAF) to maximize your charitable giving. By combining – or bunching – two or three years of annual donations into one year with a gift to your DAF, alongside other itemizations, you can accrue total tax deductions greater than the new standard deduction. The assets can then be distributed from your DAF over multiple years in accordance with your regular charitable giving schedule.
Qualified Charitable Distributions
Donors aged 70 ½ and older may make tax-free charitable gifts each year through their IRA’s Qualified Charitable Distributions (QCD). Although the 2020 CARES Act eliminated the Required Minimum Distribution for this year, the option is still available for those who wish to support their favorite charitable organizations in this way. The law allows each individual to transfer up to $100,000 of your IRA assets directly to a qualified public charity such as HCF. Because those assets are not recognized as income, they will not accrue federal income taxes.
Read more on the CARES Act
Increases in the AGI Limit
The tax deduction of cash contributions to public charities (including donor advised funds) increased to 60% of adjusted gross income (AGI) in 2017, effective beginning in 2018. The 2020 CARES Act increased the charitable cash deduction to 100% of AGI for 2020 only. Although donor advised funds are excluded from receiving the full 100% deduction, other options like establishing a designated fund at GCF to accept these assets, do exist. Our Philanthropic Advisors can help you with a customized solution to discuss with your tax advisor.