As Thanksgiving rolls back and we begin to review the year 2021, there is still a lot that we remain truly grateful for. And yet there is the cloud of COVID that still looms over our health, financial well-being and our community. Recovery is always a vision involving faith in our resilience and coming together to help each other get back on their feet collectively.
In Otsego County, we have 164 registered 501 (c) 3 charities guiding us on the road to recovery. Most are run entirely with volunteers. Only 62 have even one paid employee. Yet with limited resources, these nonprofits have risen to the challenge of ensuring that the recovery is broadly based and leaves no one behind.
This task is really difficult. Any contribution you can make to help is greatly appreciated.
Fortunately, our tax policies are rewarding these efforts. For every dollar you donate to a qualified charity, our governments (state and federal) will reduce your taxes by up to 30 cents as a reward for your generosity.
Please consider the following thoughts on how you might be able to make a year-end contribution to your favorite nonprofits. And remember there is a strict deadline of December 31st for 2021 donations.
â¢ For taxpayers who do not itemize deductions, you each have the right to reduce your taxable income by up to $ 300 by simply donating before year end to qualifying charities.
â¢ If you itemize your deductions but are not yet ready to decide which organizations you want to support, you can set up a donor advised fund and get the tax deduction this year, while deciding how to allocate your money later. Don.
â¢ For those with IRAs who are at least 72 years old, you must take your required minimum distribution (which is fully taxable) but you can eliminate this tax by donating to charities (up to $ 100,000). Be careful, however, as these gifts must be given by your IRA and not by you personally, and they cannot be given to your donor advised fund.
â¢ For 2021 (thanks to the CARES Act), donors are allowed to deduct charitable cash donations equal to 100% of their adjusted gross income (up from 60% usually). This âbonusâ does not apply to donations to your Donor Advised Fund.
â¢ Speaking of valued stocks, this might be a good time to donate highly valued stocks (owned for at least a year). In addition to the itemized charitable deduction, you eliminate capital gains tax on stock appreciation.
â¢ A charitable annuity is another way to generate a tax deduction in 2021 while ensuring a fixed annual income for your life. Upon death, the annuity funds go to your designated charity. The charitable deduction is relatively high right now, as the interest rates used to calculate the deduction amount are still very low.
Please consult your own tax advisors for more details on these ideas and contact the Otsego County Community Foundation who can help you achieve your charitable goals.
Whether tax considerations are important to you or not, now is a great time to consider supporting the nonprofits in our community that work tirelessly to help us and our neighbors. Donating today and supporting these organizations would be a great way to say thank you for being there for us.
The Otsego County Community Foundation is here to help you invest in your community. For more information, contact us at [email protected]
Harry Levine is president of the Otsego County Community Foundation.