As we approach the end of 2020, Turkish Philanthropy Funds would like to assist you with your year-end giving and grant-making with the best possible service. We encourage you to plan ahead to meet tax year deadlines that apply for giving in 2020.
If you are not sure what cause to support, you may want to consider opening a donor-advised fund, which lets you get a tax deduction in the year you make the gift and then decide on which charities to support later.
Please keep these important dates in mind to ensure your year-end gifts qualify for a charitable income tax deduction in the 2020 tax year:
- Checks sent via the U.S. Postal Service to TPF office must be postmarked on or before December 31, 2020.
- Checks sent via carriers such as FedEx, UPS and DHL must be physically received at the TPF office on or before Wednesday, December 30, 2020.
- Gifts of appreciated stock and wire transfers of cash should be made by December 23, 2020. Please note that transfers of mutual funds may take additional time so early notification of these gifts will help ensure a smooth transfer. Contact Senay Ataselim-Yilmaz at [email protected] or call 646.530.8988 for assistance with stock gifts and wire transfers.
- Online contributions may be made until December 31, 2020.
- Real estate gifts must-have title transferred on or before December 23, 2020.
Below you will see some recommendations and suggestions for your year-end giving.
Wishing you and your loved ones lots of happiness, peace, health and love this Holiday Season!
Year-end grant recommendations
Donor-advised fund holders may wish to recommend grants as part of year-end giving or as holiday contributions. In order for nonprofit recipients to receive grants in 2020, recommendations should be made by Friday, December 11 as long as the non-profit is a TPF partner in Turkey or a tax-exempt organization in the United States. Donor-advised grant recommendations could be made by logging into your account online. Please note that the timing of donor-advised grants has no effect on your 2020 charitable income tax deductions since, for tax purposes, your charitable contribution was deemed completed at the time it was contributed to your donor-advised fund.
New CARES Act
This year you can take advantage of the two provisions made possible with the CARES act.
- A $300 above the line income tax deduction for charitable gifts, which can be taken without itemizing and;
- Tax-deductibility of gifts of cash increases to 100% of adjusted gross income (AGI) for 2020 – versus 60% of AGI in 2019.
Read more about the CARES act provisions here.
Qualified Charitable Distributions from IRA
Congress has made the IRA charitable rollover permanent. You can rollover up to $100,000 from an IRA account directly to TPF without recognizing the assets transferred to TPF as income. All though the required minimum distribution has been waived for 2020 due to the changes in the AGI deductions this year, this will be a good giving option. To qualify:
- You must be 70½ or older at the time of your gift, and
- The transfer must go directly from your IRA to TPF.
Direct gifts to TPF from your IRA can:
- Be an easy and convenient way to make a gift from one of your major assets.
- Be excluded from your gross income: a tax-free rollover.
- Count toward your required minimum distribution.
Please note that a distribution to a donor-advised fund does not qualify for this special treatment. Please contact Senay Ataselim-Yilmaz at 646.530.8988 or [email protected] if you’d like to contribute IRA assets.
Consider Donating Appreciated Stock at the End of the Year
If your investment portfolio has prospered, you may want to consider making some of your year-end gifts with appreciated stock. You can achieve a greater impact by donating long-term appreciated securities. Compared to donating cash, or selling your appreciated securities, and contributing the after-tax proceeds, you may be able to automatically increase your gift value and increase your tax deduction.
How does it work?
It’s simple and easy.
Consider what stock has grown in value since you bought it.
An appreciated stock that is contributed to TPF is exempt from capital gains taxes. If you sold the stock and used the proceeds to write a check for your gift, you would potentially be liable for capital gains tax. When you claim a charitable tax deduction for your gift, the full fair market value of the appreciated stock on the transfer date is your gift amount.
An illustration of the value you would realize if you donated your appreciated stock to TPF appears below. (Note: To bypass long-term capital gains, you need to have owned the stock you select for gifting at least 366 days)
The original cost of the stock: $50,000
Potential federal long-term capital gains rate: 20%
The current value of the stock: $150,000
|Sell stock and donate proceeds||Donate stock to TPF|
|Long-Term Capital Gains Tax||$20,000||$0|
The additional amount dedicated to the nonprofit organization is an average of $20K (the value of the capital gains tax).
The value to you is a higher tax deduction and a greater charitable gift.
What should I do to take advantage of this opportunity?
- Contact your broker. Every brokerage firm has a slightly different requirement. Make sure you check their end-of-year deadlines to make sure your gift transfers before the end of December 23, 2020.
- Notify TPF so we are aware of the pending transfer and identify where the funds should be directed. Please contact Senay Ataselim-Yilmaz at [email protected] who will provide you with a stock transfer instructions document to share with your broker.
Note: This information is for educational purposes only and is not intended to be legal or financial advice. Please contact your own professional advisor for individual financial and legal advice.