The Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was signed into law in March 2020. The CARES Act includes new and expanded tax benefits to encourage taxpayers to make charitable gifts in 2020. The tax benefit applies to charitable gifts to all types of charities, not just gifts to those charities related to the COVID-19 crisis. The tax benefit is also not limited to those taxpayers that have itemized deductions.

Understanding the Tax Incentives

The 2020 Coronavirus Aid, Relief and Economic Security Act (the CARES Act) includes new and expanded tax benefits to encourage taxpayers to make charitable gifts in 2020. Taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020. The gift must be a cash gift which includes donations made by check or credit card included. A gift of appreciated property will not qualify for the deduction.

2020 Increase to 100% of AGI Deduction

In general, individual cash contributions to public charities such as the Mission Trails Regional Park Foundation are limited to 60% of the individual’s annual adjusted gross income (AGI). Gifts of appreciated property are limited to 30% of AGI. For tax year 2020, the CARES Act raises the limitation, allowing qualified cash contributions made by individuals to be deductible up to 100% their AGI.

Increase your Deduction with Roth Conversions

Donors can increase their AGI by converting an IRA or other qualified retirement plan to a Roth IRA. Such a conversion will increase the income available for the 100% of AGI limitation. A Roth conversion offers the opportunity for very charitably minded donors to accomplish two goals at the same time – get a larger charitable contribution deduction in 2020 and pay no federal income tax on the Roth IRA conversion.

Donating Stock to the Mission Trails Regional Park Foundation

As the year draws to a close, it’s time to review your stock portfolio, and make decisions about gains and losses. You may be looking at an appreciated stock that seems like it could now be overpriced. You can sell that stock and pay a capital gains tax. Instead, avoid the capital gains tax, and take a tax deduction instead, by donating your appreciated stock to MTRP. Your deduction is the current (donated) market value. Suppose you bought 100 shares of Qualcomm (QCOM) stock two years ago for $55/share, and donated that stock to the MTRP Foundation today. You paid $5,500.00 for the stock, and you made a gift to MTRP of $14,600.00. You avoid a capital-gains tax and you receive instead a charitable deduction of $14,600 (which you can typically carry forward). Your $14,600 gift costs $5,500.

There are no Required Minimum Distributions (RMDs) from IRAs this year. (This is part of the CARES Act). You can still donate from your IRA, however, but for tax efficiency, you’re better off donating appreciated stock.

Planned Giving: Leave a Legacy at Mission Trails

The Mission Trails Regional Park Foundation welcomes gifts made through planned giving arrangements. Your estate planning professional can you help you determine the right plan will based on your personal financial situation and goals. A few examples of planned giving arrangements include:

• Adding the MTRP Foundation as a beneficiary to your will or living trust.
• Naming the MTRP Foundation as a beneficiary of all or a portion of your life insurance policy.
• Naming the MTRP Foundation as a beneficiary to your retirement plan.

Talk to your tax-preparer now about how these general principles apply to you, and contact Jennifer Morrissey, Executive Director, MTRP Foundation, at (619) 972-1268 or email jmorrissey@mtrp.org for easy instructions on how to donate to MTRP.

This report is provided for informational and educational purposes only. In addition, the information is subject to change without notice. Neither Mission Trails Regional Park Foundation nor its employees provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you implement.