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Why Tax Time is the Right Time to Plan Your 2020 Charitable Giving


With the deadline to file your 2019 federal tax return extended to July 15, tax season is still upon us.

What you may not know is that your charitable giving choices this year can affect how much you owe the IRS or will see in tax refunds in 2021.

If you didn’t consider how charitable donations could impact your 2019 tax returns, now is the perfect time to start thinking about your 2020 charitable giving plan.

Here are six tips to get you started:

  1. Ask your tax attorney, wealth manager or financial advisor to explain the benefits of charitable giving as it relates to your financial situation.

  2. While giving may have benefits from a tax perspective, your underlying motivations to give likely run deeper. Make a list of causes you care about; this will help guide you in creating a more meaningful giving plan.

  3. If you are already donating cash, ask your tax advisor whether making gifts through publicly traded securities, like stocks, bonds and mutual funds, could reduce your taxes.

  4. If you made donations last year but didn’t qualify for an itemized deduction, consider bundling your gifts, also known as gift bunching. The 2017 tax law increased the threshold amount necessary to itemize charitable deductions. Bundling gifts allows you to stack several years of giving into one year, increasing the likelihood of qualifying for itemized deductions.

    For example, opening a donor advised fund allows you to organize your giving into one year for tax purposes, then distribute that money to charity over multiple years.

  5. If you are 70-and-a-half years old or older, you may consider taking advantage of the Qualified Charitable Distribution, or charitable rollover, from your Individual Retirement Account (IRA). Taxpayers in this age group may transfer up to $100,000 annually from their IRAs directly to charity without being subject to income tax on that transfer.

    Once you turn 72, and are subject to a Required Minimum Distribution (RMD) from your IRA, charitable rollovers may help you avoid income taxes on those distributions.

  6. Use your local community foundation, like the Saint Paul & Minnesota Foundation, as a resource and giving partner.

Our gift planners will chat on the phone with you and your professional advisor to help explore giving options. We are experts in our community’s needs and giving landscape — focusing on relationships, not just transactions — and will work with individuals, couples or families.

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