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Planning FORWARD In times of uncertainty
Ideas for Giving and Moving Forward in 2020 During this time, Hawai'i Community Foundation has been working in close collaboration with state leaders, non-profit organizations, businesses, and philanthropists to understand the quickly evolving priorities in our community. In response to the current situation, Congress recently enacted several tax law changes for you to be aware of. Hawai'i Community Foundation created this document to help you prepare for tax planning and to share ideas if you are considering a gift in 2020 to support our island communities.
CARES Act This recently passed law includes several charitable tax provisions to encourage giving. These include: ●
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A new deduction for charitable donors who do not itemize when filing their tax returns. If you do not itemize but make a gift to charity, you will be allowed to take a special tax deduction, up to $300, to reduce your tax liability. An increase in the deduction limit up to 100% of a donor's annual income for cash gifts (previously the deduction was capped at 60% of annual income). If you make a gift you may be able to deduct more this year.
This information is not intended as tax, legal or financial advice. Gift results may vary. Consult your personal financial advisor for information specific to your situation. 20DJ07
Donor Advised Funds If you have an existing donor advised fund with HCF, please contact us to explore how your dollars can have the most impact on communities in need right now, without affecting your personal situation.
IRA Charitable Rollover If you are 70 1/2 you can direct your IRA administrator to distribute a gift from your IRA to a qualified charity. Any amount transferred (up to $100,000) may satisfy your required minimum distribution (RMD) obligation and will not be treated as a taxable distribution. For tax year 2020, the CARES Act temporarily suspended RMDs so the amount distributed to a qualified charity in 2020 will not offset any RMD but continues to be a great way to support your favorite charity.
Cash Gifts & Appreciated Assets
Donating appreciated assets is an easy and tax-effective way to make a gift, receive a tax deduction for the full market value of the gift, and avoid paying capital gains taxes. For the tax year 2020, the CARES Act increased the deduction limit for a cash gift to 100% of the donor's adjusted gross income. As such, it may be more advantageous to consider making a cash gift in 2020 than a gift of appreciated assets. Please consult with your financial advisor, accountant, attorney, etc. to optimize the opportunity of making a gift of cash or appreciated assets.
SECURE Act In December 2019, Congress passed the SECURE Act, limiting stretch payments to IRA beneficiaries to 10 years. If you planned to benefit your children with your IRA, your heirs may now pay higher taxes on the inheritance they receive from you. When you revisit your estate plan, consider funding a testamentary charitable remainder unitrust with your IRA balance. This plan can provide lifetime payments to your heirs and spread out the taxes on their inheritance.
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