2020 END OF YEAR TAX PLANNING
By Robert Christopher Morton
Director of Planned Giving
American Society for Yad Vashem
Today, we find ourselves in an era where paradoxically both Holocaust denial and distortion and interest in the lessons and legacy of the Holocaust are at an all-time high. Seventy-five years after the liberation of Auschwitz, antisemitism continues to steadily increase within the United States and around the globe. At the same time, the unprecedented challenge with the COVID-19 pandemic makes the lessons of the Shoah, lessons of hope, strength, and resilience resonate broadly.
Situated in the heart of Jerusalem, Yad Vashem plays a critical role in meeting the contemporary challenges of Holocaust remembrance and education in the 21st century.
Its mission to educate, commemorate, document, and research this tragic period in human history has never been more relevant or necessary than today. The lesson is time tested: those who forget the past are doomed to repeat it.
Your support is important and appreciated and we hope you will consider including the American Society for Yad Vashem in your year-end giving. Below are several tax planning ideas that may benefit you, as well as, the American Society for Yad Vashem.
If you are actually over the age of 70 ½, you can make a Qualified Charitable Distribution (QCD) of up to $100,000 annually from your individual IRA (Traditional or Roth) to the American Society for Yad Vashem (ASYV) before the end of the calendar year. This type of gift is also commonly called the IRA Charitable Rollover. Many charities are recommending this option for donors over the age of 70 ½ or 72, especially towards the end of the calendar year.
A donor older than 70 ½ or 72 can individually distribute up to $100,000 each year from his or her IRA (through its administrator) to the American Society for Yad Vashem without having to recognize the distribution as income to the donor. This distribution can be used to satisfy the RMD (Required Minimum Distribution) for the year the distribution has been made. HOWEVER, THERE IS NO REQUIRED MINIMUM DISTRIBUTION FOR 2020, in accordance with the 2020 CARES (the Coronavirus Aid, Relief and Economic Security) ACT. Please note that the gift must be completed by December 31 (check cashed by ASYV) in order to qualify and no benefit may be received by the donor from the charity.
As the American Society for Yad Vashem is a public charity, it falls within the permitted charitable recipients of an IRA Charitable Rollover. The donor must notify the administrator of the IRA to make a direct distribution to the charitable beneficiary in order to qualify. This giving opportunity was made permanent by the passing of the PATH (Protecting Americans from Tax Hikes) Act in December of 2015 by Congress.
TAX CUTS AND JOBS ACT OF 2017
The Tax Cuts and Jobs Act of 2017 made a number of significant changes regarding income taxes for individuals and families, most important among them are now a total of seven income tax brackets, lowering taxes for some and raising taxes for others. We are living with the impact of the 2017 law, as it has simplified tax preparation for many, but significantly increased taxes for individuals living in states where there are high state income taxes, such as New York, New Jersey, Connecticut, and California.
This coming tax season again will product much angst for individuals and families domiciled in states that have state income taxes, as the final version of the Tax Cuts and Jobs Act of 2017 maintained this deduction, but limited the total deductible amount to $10,000, which includes income, sales, and property taxes. This limitation on deductibility has been quite significant for most upper-income individuals and families. There was an expectation that this limitation might be eliminated in 2020 by Congress, but it has not come to pass. Also included in the Tax Cuts and Jobs Act was an increase in the deductibility of cash gifts from 50% to 60% of AGI (Adjusted Gross Income). The 2020 CARES ACT raises the limit to 100% of AGI for only 2020. This deductibility does not apply to donations to Donor Advised Funds or support organizations.
In addition, the standard deduction for individuals will be $12,400 in 2020, for heads of household will be $18,650 in 2020, and for married couples filing jointly and widows will be $24,800 in 2020. Some additional consequential income tax deductions were eliminated by Congress as a part of the Tax Cuts and Jobs Act of 2017, a few of which are listed here: most insurance casualty and theft losses; tax preparation charges; moving expenses; and employee expenses not reimbursed by the employer. Many more individuals and families utilized the standard deduction in 2020 than in past years.
DONATING APPRECIATED SECURITIES TO CHARITY
One tried and true option is to utilize appreciated (increased in value) publicly traded securities as a method of donation to a charity such as ASYV. If the stock has been held for one year by the donor, the donor is entitled to deduct the fair market value of the security (based on the average of the high and low on the date of transfer to the charity) and avoid paying capital gains on the increase in value of the security or securities transferred. This is a wonderful way to maximize the value of the donation.
Remember, it is always wise to check with your accountant or tax advisor as part of your review process. If you have any questions, please feel free to contact me by telephone at 212-220-4304 extension 213, or by e-mail at email@example.com.