It's the season of giving — both because of the holidays and because the end of the tax year is approaching. NATS is a qualified charity that you may give to and deduct your gift for tax purposes.
Taking the Standard Tax Deduction?
Of course, the great majority of us now take the standard deduction, but the 2020 CARES ACT allows you to also deduct up to $300 in cash gifts as tax-deductible contributions to qualified charities. For 2021, this above-the-line deduction is increased to $600 for married couples filing jointly who do not itemize tax deductions.
Itemizing Your Tax Deductions?
For those who itemize their deductions, the temporary suspension of the 60 percent charitable contribution deduction limitation has been extended into 2021. Individual taxpayers who itemize tax deductions and who contribute cash to a public charity may deduct up to 100 percent of their adjusted gross income after considering other contributions subject to charitable contribution limitations.
Gifts from Your IRA (QCD, or Qualified Charitable Distribution)
Giving to NATS through your IRA might be to your advantage.
Traditional IRAs require you to take “Required Minimum Distributions” once you reach age 70.5. Because you did not pay federal income tax when you contributed the money to your account, you pay taxes when you withdraw it. However, you can avoid the tax on that distribution by donating directly from your IRA to a charity. This is called an IRA charitable rollover or a qualified charitable distribution (QCD).
A QCD is a direct transfer of funds up to $100,000.00 from your IRA trustee to a qualified charity. If a distribution check is made payable to you, the distribution would be treated as taxable income.
Making a distribution is an easy process. Simply contact your plan administrator and tell them you would like to make a charitable donation from your IRA. Typically, they will supply you with a distribution form for you to fill out and return.
At the end of the year, the administrator will provide you with a Form 1099-R so you can report it on your taxes. The distribution will go on your Form 1040 tax return, where you will report the distribution as a non-taxed QCD. See the Form 1040 instructions or contact your tax professional for additional information.
This rollover is an attractive option for taxpayers who either don’t want or don’t need the extra taxable income from their IRA’s required minimum distribution.
Consult your investment advisor about a decision to make a rollover gift.
Contact your IRA custodian and request a direct transfer to:
National Association of Teachers of Singing, Inc.
9957 Moorings Drive, Suite 401
Jacksonville, FL 32257-2416
(Tax identification number 36-6118354)
Questions? Contact Bob Bryan or call us at (904) 992-9101.