Tax Strategies for Charitable Giving

  • Your support makes a difference. That’s especially true at the end of the tax year, when you can combine tax-effective strategies with increased generosity and support of IUP students with a gift to the Foundation for IUP.

    Below are a few key provisions of the new CARES (Coronavirus Aid, Relief, and Economic Security) Act. This new law is designed to help you, businesses, and nonprofits facing economic hardship during the coronavirus pandemic.

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  • Suspended Minimum Distributions

    The CARES Act temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year.

    This probably comes as a relief if you would have had to withdraw a greater percentage of your retirement accounts this year. Many of our donors use their RMD to make a gift from their IRA. If you are 70½ or older at the time of your donation, you can still make a gift from your IRA or name us as a beneficiary.

    In addition, there are some new ways you can receive financial benefits and help organizations like us. You can still make a qualified charitable distribution (QCD) of up to $100,000 from your IRA to a nonprofit this year. The QCD is not tax-deductible, but it does reduce the taxable balance of your IRA.

    Charitable Deductions

    The CARES Act allows all taxpayers to take a charitable deduction of up to $300, even if you do not itemize.

    A gift of $300 can make a huge difference for a student struggling to pay for their textbooks, filling their refrigerator, or registering for the next term for instance.

    Cash Contributions

    If you itemize your deductions, the CARES Act allows for cash contributions to qualified charities (like the Foundation for IUP) to be deducted up to 100 percent of your adjusted gross income for the 2020 calendar year.

    If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can carry forward any unused cash contribution deductions for up to five years. There are a few important limitations: the 100 percent AGI limit doesn’t apply to non-cash gifts like stock or other property, or to gifts made to your donor-advised fund.

    Corporate Donors

    Corporate donors received similar incentives to increase their charitable giving this year.

    While corporate giving is normally limited to 10 percent of the taxpaying entity’s tax income, the CARES Act raised that limit to 25 percent for cash gifts made in 2020. Similar limitations apply as to individual contributions.

    Please consult your tax advisor for specific advice regarding your charitable contribution to the Foundation for IUP in support of IUP.

    Please contact the Office of Annual Giving at iup-giving@iup.edu or 724-357-5555 if you have any questions on how you can make an impact today.