Is There Still Opportunity?

“So then, whenever we have an opportunity, let us do good to all people, and especially to those who belong to the family of faith.” Galatians 6:10

Mark Twain once said, “I was seldom able to see an opportunity until it had ceased to be one.” His statement seems quite appropriate for the Christian steward who is hearing God’s call to maximum generosity. Out of the turmoil and challenges of 2020 have come some truly unprecedented opportunities to benefit the ministries we love. If you are motivated to give to the Lord’s work and intrigued by saving taxes, please read on.

No Adjusted Gross Income Limitation for Charitable Deductions

The ability to deduct charitable gifts that could eliminate your federal adjusted gross income for tax purposes is unprecedented in modern history. Financial planners believe this to be a genuine opportunity for:

  • high earners,
  • those who have cash reserves, and
  • those with a heart to give to Kingdom work.

Don't forget! Even non-itemizers can deduct $300 ($600 for joint filers) in charitable gifts in 2021.

Cash In—Cash Out—No Tax Paid

If you:

  • have qualified retirement assets that would normally be taxable if withdrawn,
  • are at least 59.5 years old, and
  • you want to make a generous charitable gift . . .

. . . you can likely withdraw any amount of cash, make a charitable gift of the same amount, and pay no additional income tax.

A Basket Full of Losses

If you have an investment that has lost capital value and you wish to make a charitable gift, you can get a “two-fer.” Sell the asset at a capital loss, make a gift of cash from the sale, and use both the capital loss and the charitable deduction to reduce your taxable income.

Deduct a Gift Now—Deliver the Gift Later

If you have real estate property (house, farm, or vacation home) which you would like to leave to your favorite ministry in the future, you can make the gift in 2021, retaining the use of the property for your lifetime. In today’s low interest environment, the value of your charitable tax deduction is increased, and you have up to 6 years to use it all.

Maximum Tax-free Income and a Charitable Gift in the Future

For those who want to be generous to Kingdom work but need the income produced by their assets, a Charitable Gift Annuity (CGA) may make a lot of sense. With a CGA, you receive an immediate tax deduction and income for life. In today’s low interest environment, much of the income will be paid to you tax-free. Income after actuarial life-expectancy will be taxed as ordinary income.

Avoidance of Capital Gains Tax, Income, a Charitable Deduction, and a Future Charitable Gift

If you want to sell highly appreciated assets without paying tax at the time of the sale, the Charitable Remainder Trust is a flexible tool to achieve your goals. You can continue to receive income from the asset value, receive an immediate tax deduction, and make a future gift to your favorite ministry or ministries.

Charity Picks the Fruit—Family Gets the Orchard

Technically referred to as a Charitable Lead Trust, the concept has long been a secret of the “super wealthy.” With today’s low interest environment, assets can be passed to family members with low or no taxes in a much shorter time. The “fruit” picked by charity is annual income. The “orchard” is the asset producing the income. Once the ministry has picked enough fruit to offset the transfer tax to your family, the orchard (and the future fruit) can pass to your family tax-free.

Qualified Charitable Distribution (QCD)

Sometimes referred to as a Charitable Rollover, the QCD allows you to instruct your IRA custodian to send up to $100,000 per year to your favorite ministry or ministries. While this is not expected to change in the future, your window of opportunity for 2021 closes on December 31. Most custodians need at least a few weeks to process the distribution, so the sooner you initiate it the better.

May We Help?

As of today, these opportunities come with an expiration date. Most will “cease to be one” in the not-so-distant future, some as early as December 31, 2021. If any of these opportunities intrigue you, we would be honored to discuss them with you. Simply email us at dduncan@cdfcapitalfoundation.org.

Learn more about year-end giving by reading our eBook, The 2021 Guide to Year-End Giving.

NOTE: CDF Capital Foundation does not provide legal or tax counsel. Not all opportunities may apply to all individuals. Please consult your own professionals regarding possible benefit to you in your unique tax situation.

© 2021 CDF Capital Foundation from the Lifestyle Giving Legacy files