The SECURE and CARES Acts: Three Ways to Lower Your Taxes through Charitable Giving in 2020
Everything comes from You, and we have given You only what comes from Your hand. 1 Chronicles 29:14
As citizens of Christ’s kingdom, we seek to align our time, talent, and treasures with his kingdom purposes and live as faithful stewards. As citizens living in this world, we recognize that we have a responsibility to “render unto Caesar what is Caesar’s” (Matthew 22:21). Among other things, this includes paying our taxes.
In the past year the US Congress has approved two significant acts that impact charitable giving – known as the SECURE act and the CARES act. Here are three ways to consider giving differently in light of the recent changes.
Note: Since some of these options expire this calendar year, you may want to consider them soon!
Three Ways to Lower Your Taxes through Charitable Giving in 2020
1. Increase Your Cash Giving in 2020
- This year, all donors who use the standard deduction on their tax return are allowed an above-the-line charitable deduction up to $300. This provision was made specifically to encourage charitable giving. To illustrate this benefit – if your tax rate is 22%, the net “cost” of the first $300 you donate is $234.
- For the 2020 tax year only, donors who itemize can deduct cash gifts up to 100% of their adjusted gross income (AGI), reducing or eliminating their federal tax liability. If you have been planning to make a larger gift than normal, or have made a multi-year pledge, you might want to accelerate payment in 2020. Langham Partnership or other ministries will benefit sooner, and you will benefit from the deduction more quickly.
- If you have resources in your retirement fund that you will not need during retirement, you may be able to withdraw those funds, give the same amount to a qualified charity, and avoid paying federal income taxes on the distribution.
- If you have larger income this year (for example, because of a ROTH IRA conversion) you can reduce your income taxes through increased charitable contributions.
2. Make Annual Gifts from your IRA
- Donors who are over 70.5 years old are eligible to make a Qualified Charitable Distribution (QCD) directly from their IRA. By giving directly from your IRA (instead of taking the funds out as income and giving cash) you reduce your taxable income.
- The SECURE act requires most inheritors (other than a spouse) to take full distribution of IRA funds within 10 years, which could mean far greater taxes for heirs. This is another reason why it makes sense to make your charitable gifts from your IRA.
3. Include Langham as a Beneficiary of your IRA
- Since the SECURE act requires distribution of IRA funds to most individuals within 10 years, and those funds are taxed as income, there is a “cost” to inheriting funds from an IRA.
- If you desire to leave an inheritance to your children or others, it often makes sense to consider assets other than your IRA as the first source for these gifts.
- When Langham or another non-profit is listed as the beneficiary of an IRA (using a simple beneficiary designation form) these funds are not taxed, since they are given to a qualifying charitable organization.
- Additionally, by naming Langham or another ministry as a beneficiary of all or a portion of your IRA, you have the opportunity to make a truly impactful gift – often many times your lifetime giving!
If these ideas have sparked interest or raised questions, I would be happy to discuss them with you and pray alongside as you seek God’s wisdom. I love helping God’s people give generously and wisely as we grow on our stewardship journey. Of course, all conversations are confidential and come without any obligation. If you have already made plans for a Legacy Gift to Langham Partnership, it would be my joy to welcome you as a charter member of our Cross of Christ Legacy Fellowship. You can reach me at email@example.com or 314-488-0256.
Note: The ideas shared here are not intended as tax, legal, or financial advice. Your circumstances will impact the how the laws apply, and we recommend you consult your financial and legal professional.
Kevin VandenBrink, Planned Giving Director for Langham Partnership, is a Chartered Advisor in Philanthropy (CAP®) and a member of the National Association of Charitable Gift Planners. He is passionate about helping people like you who care about the global church and long to be wise stewards. He also brings to the Langham team many years of engagement in theological education, pastoral ministry, and global missions.
Kevin would love to hear your story, celebrate what the Lord is doing through Langham, and visit with you about the options and benefits of including Langham in your planned giving. Please click here to send an email to Kevin, or call him at (314) 488-0256.