2020 has been a tumultuous year, to say the least. As you and your advisors sit down to discuss year-end tax and charitable planning, there are several additional factors this year that can influence key decisions. The COVID-19 pandemic continues to impact virtually all aspects of the economy; and the upcoming election is bound to bring changes to Washington that could result in significant changes to the income, estate, and gift tax regimes.
This year, charitable giving has taken on new meaning and importance. In a time of social distancing and uncertainty, giving has become a primary way for us to care for one another and remain connected. Of equal importance, is the increased reliance on charitable giving for our beloved community organizations and the many families among us who are struggling to make ends meet. There are few times in history where we have needed each other more.
Members of the Tidewater Jewish community, along with people all over the world, have risen to the challenge and are giving generously to care for others in need. As we near the end of the year and begin to evaluate personal finances, you may want to consider a handful of giving strategies to reduce your tax burden and make a greater impact.
DONATE TO THE TIDEWATER JEWISH COMMUNITY COVID-19 EMERGENCY RELIEF FUND
The COVID-19 Emergency Relief Fund protects provides support for cherished community institutions and helps ensure our most vulnerable community members have the resources needed to navigate these unprecedented times. A joint effort between the United Jewish Federation of Tidewater and the Tidewater Jewish Foundation, the COVID-19 Emergency Relief Fund has supported emergency needs throughout the community. To date, the fund has distributed more than $100,000 to assist vulnerable populations, agencies, and synagogues. Additionally, TJF donor advised fund holders have made over 40 distributions to help meet COVID-related needs. Dollars have gone to area congregations, provided personal protective equipment for Beth Sholom Village and Jewish Family Service (JFS), helped JFS provide financial assistance for individuals in need, assisted the Foodbank of Southeastern Virginia and JFS Food Pantry combat rising food insecurity, and supported our day schools’ preparations to reopen safely. These needs will continue to increase.
CREATE A DONOR ADVISED FUND (DAF)
A Donor Advised Fund is an excellent way to set aside dollars that you plan to distribute over time rather than all at once. This is a particularly valuable tool if you are concerned about capital gains tax from non-recurring events or transactions and/or if you make multiple gifts to organizations throughout the year. For example, after the sale of a home, a donor may make a tax-deductible gift with some of those proceeds into a DAF and then use that fund to cover temple dues and annual campaign gifts over a number of years. In addition, a DAF streamlines the giving process and connects donors to expert philanthropic advisors.
A DAF allows you to make charitable gifts into the fund at any time while retaining the ability to make distribution requests from the fund to charitable organizations of your choice (Jewish or non-Jewish). You may also name your child(ren) as successor advisor(s) to your family fund. This type of fund may be established by an individual, a couple, or a family
If you establish a new DAF through TJF with at least $7,500, TJF will match your gift with an additional $2,500, totaling $10,000 or more in your new fund. That’s an extra $2,500 with which you can make a difference.
LEGACY MATCH LIFE INSURANCE PROGRAM
Charitable Life Insurance is one of the most impactful (and underutilized) ways to make a gift. If you donate $5,000 or more per year (including synagogue dues) and are under age 65, this is an excellent philanthropic vehicle to consider. For example, a couple, both age 40, can make annual tax-deductible gifts of $1,753 for a period of 10 years to make a $250,000 gift to their community.
Right now, TJF is offering a 35% match of premiums for specific types of policies. A Charitable Life Insurance Policy can help you make a greater gift than you ever thought possible.
LIFE & LEGACY – A GIFT TO SECURE A JEWISH FUTURE
LIFE & LEGACY is a program that helps individuals and families create legacy gifts, providing a permanent source of support for the Jewish causes they care about. These endowed gifts are already working to help care for our elderly, ensure local synagogues are able to keep its doors open for the next generation, feed the hungry, preserve Jewish identity, protect and strengthen Israel, and much more. Legacy gifts are no longer exclusively for the wealthy. With this program, anyone can make a gift to ensure a strong, Jewish tomorrow. There are a variety of giving options available that can be tailored to meet your needs and help you achieve your philanthropic goals.
In less than 4 years of the program, Tidewater Jewish organizations have secured 549 commitments totaling approximately $21 million in current and future endowed gifts. Tidewater LIFE & LEGACY partners include: Congregation Beth El, Strelitz International Academy, Ohef Sholom Temple, Beth Sholom Village, Jewish Family Service of Tidewater, United Jewish Federation of Tidewater, Temple Emanuel, Chabad of Tidewater, and Simon Family Jewish Community Center.
OVER 70 ½? QCDS STILL AVAILABLE IN 2020
Thanks to the CARES Act, Required Minimum Distributions (RMDs) from Individual Retirement Accounts (IRAs) are waived for 2020. However, Qualified Charitable Distributions (QCDs) remain available and offer tax benefits for donors older than 70 ½. The QCD, or charitable IRA rollover, is a special provision allowing certain donors to exclude from taxable income—and count toward their RMD in typical years—certain transfers of IRA assets that are made directly to public charities. In order for a gift to qualify for the charitable IRA rollover, the gift must be transferred directly from an IRA to a permissible public charity (such as Tidewater Jewish Foundation for the benefit of one or more organizations). Additionally, the gift must be completed during the applicable tax year. An individual taxpayer’s total charitable IRA rollover gifts cannot exceed $100,000 per tax year. A married couple may transfer up to $200,000. Many donors are using their IRA to fulfill their Life and Legacy commitments.
GIFTING OF APPRECIATED SECURITIES
The end of year is a great time to consider a charitable contribution of long-term appreciated securities (e.g. stocks, bonds, and/or mutual funds that have realized significant appreciation over time). It is one of the most tax-efficient ways to give. Long-term appreciated securities with unrealized gains (meaning they were purchased over a year ago, and have a current value greater than their original cost) may be donated to a public charity (such as TJF) and a tax deduction taken for the full fair market value of the securities—up to 30% of the donor’s adjusted gross income. You may gift any appreciated securities directly to Tidewater Jewish Foundation into a current fund or create a new fund, such as a Donor Advised Fund to benefit one or more organizations now and in the future. You may receive your tax deduction at the time of the gift of the securities and determine later which organizations you would like to receive distributions from the fund.
OTHER CHARITABLE PROVISIONS OF THE CARES ACT
The CARES Act, enacted to provide COVID-19 relief, contains a provision that enables the current deduction of up to 100 percent of adjusted gross income for cash gifts to charity, up from 60 percent (other than to donor-advised funds, supporting organizations, and private foundations). Individuals considering large cash donations may find this one-year lifting of the adjusted gross income (AGI) limitation to be beneficial. In addition, and only for 2020, the CARES Act made a new deduction available for charitable deductions for those taxpayers who only take the standard deduction (those who do not itemize their deductions). The deduction is up to $300 per taxpayer ($600 for married couples) and this is an “above the line” adjustment to income that will reduce a donor’s AGI and thereby reduce taxable income. A donation to a DAF will also not qualify for this new deduction.
- Naomi Limor Sedek
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.
To discuss any of these gifting options, specific goals and objectives, and to learn what is right for you and your family, contact Naomi Limor Sedek, Tidewater Jewish Foundation President & CEO. Call 757-965-6109 or email at email@example.com.