CARES Act and Your Charitable Giving

In response to our nation’s current situation, Congress recently enacted several tax law changes. As The College of Wooster continues to move forward with its important work, we appreciate this opportunity to offer resources that may help you with your tax planning and provide ideas for you to consider if you are thinking about making a gift to support Wooster and its mission during this critical time. If you have additional questions about how recent events and tax law changes will affect your taxes, we recommend reaching out to a tax advisor.

CARES Act

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act was signed into law on March 27th, 2020 and includes key changes for the ways you might support Wooster. This recently passed law includes several charitable tax provisions to encourage giving. These include:

  • A new deduction for charitable donors who do not itemize when filing their tax returns. If you do not itemize but make a charitable gift, you will be allowed to take a special tax deduction, up to $300 to reduce your tax liability.
    • Gifts to donor advised funds (DAFs) and supporting organizations (SOs) do not count towards this charitable deduction.
  • An increase in the deduction limit up to 100% of a donor's annual income for cash gifts.
    • The normal deduction limit is typically 60%, but the increased limit can reduce your income tax for 2020 even further.
    • This increase to deductions does not apply to gifts to donor advised funds (DAFs) or supporting organizations (SOs).

Individual Retirement Accounts

No Required Minimum Distributions (RMD) from your IRA, but Qualified Charitable Distributions are still a smart way to give

  • For individuals with IRA accounts, there are no Required Minimum Distributions (RMDs) this year. However, giving pre-tax funds out of your IRA will still lower your future tax burden compared to giving cash. If you are interested in this method of giving please contact your IRA custodian today or contact Katie Bradshaw at kbradshaw@wooster.edu for more information.
  • All RMDs from your individual retirement account (IRA), 401(k), or 403(b) have been suspended this year. If your RMD was set to begin in 2020, it is now postponed until 2021. Individuals are still able to take distributions from their accounts if they would like to do so. Although there may no longer be a required minimum distribution, it is still possible to make a qualified charitable distribution (QCD) from your IRA if you are 70 1/2 or older.

Donor Advised Funds

If you have a Donor Advised Fund (DAF) and wish to help us this year, you can make a gift from your DAF to support our work without affecting your personal financial security.

Charitable Gift Annuity

If you are concerned about your financial security given the ups and downs of the stock market, you may want to consider making a gift to fund a charitable gift annuity. You might be surprised by the benefits. You can exchange your low-performing stock, CDs or cash for guaranteed, lifetime fixed payments. If you make a gift of an appreciated asset, you will not have to pay capital gains when you fund the annuity. You may also benefit from a tax deduction this year and a portion of your payments could be tax-free. Run your free illustration today to see the benefits of a fixed payment while still supporting Wooster.

SECURE Act

In December, 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 will 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.

If you are interested in learning more about any of these ideas, please contact us and let us know how we can help you.

The College of Wooster | Office of Advancement | 330-263-2533 | giving@wooster.edu 

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