By NAT Patron & Arts Education Supporter, Werner Krause
Now is the time to start thinking about philanthropy and tax planning for 2020. The COVID-19 situation has had a major impact on many organizations including Next Act’s primary education program, Next Actors, the five-week total immersion workshop for high school students; a program which deserves continuing support. (A modified, virtual program has been planned for summer 2020.)
In past years at the spring gala Bravo Next Act, my wife and I challenged attendees to contribute to Next Act’s education efforts. Even though the gala had to be canceled this year, we are happy to announce that we will still issue the same challenge. We will match, dollar for dollar, the first $5,000 of contributions pledged or received by September 1, 2020 for Next Act’s 2021 arts education initiatives, including Next Actors!
You might also be asking yourself, “How can I make a contribution in the most efficient and affordable manner?” Here are a few ways to stretch your giving dollars:
- Recent stimulus-based legislative measures provide for an additional tax deduction of $300 for charitable contributions during the 2020 tax year for all taxpayers, regardless of income bracket. Why not make a contribution of $300 or more to Next Act and have it matched by the aforementioned challenge from the Krause Family?
- That legislation also removed Required Minimum Distributions (RMD’s) from IRA’s and 401k plans for individuals over 70 ½ years of age for the 2020 tax year. In the past, this has been an ideal way to direct money to favorite charities (Qualified Charitable Contributions), to reduce taxable income and minimize Medicare premium adjustments. Have no fear: RMD’s will return in the near future. But don’t let that stop you from making a matching contribution this year!
- If you were fortunate to capitalize on the investment market’s volatility or have experienced a significant taxable event (i.e. the sale of a private company, etc.), a contribution of appreciated securities to a Community Foundation Advised Fund may be advisable. A current year charitable tax deduction of up to 30% of Adjusted Gross Income is allowed and you are not required to report as taxable income any gain on the gifted securities. A Community Foundation invests funds and distributes “advised” amounts to various charitable organizations, at your suggestion, for many years in the future. By doing this, one can switch from itemizing to a standard deduction in future years while minimizing income taxes and maintaining a level flow of funds to one’s favorite charities.
Be sure to review these suggestions and other cost effective methods for charitable giving with your financial advisor or tax consultant to find what is right for you.