As 2021 draws to a close, there are two ways that friends of Thomas Aquinas College can help support the College’s mission of Catholic liberal education — while also saving money on their taxes. The first is through increased deductibility options on charitable giving, available to all taxpayers, for gifts made before January 1. The second is through an IRA Charitable Rollover, open to Americans over the age of 70½.
CARES Act Charitable Giving Incentives
“It doesn’t matter if you take the standard deduction, or if you itemize your tax returns,” says James Link, Thomas Aquinas College’s executive director of development. “If you give to TAC in calendar year 2021, you stand to achieve significant tax savings.”
In response to the economic fallout of COVID-19, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act last year. Among the act’s provisions are measures designed to encourage gifts to non-profit organizations, such as Thomas Aquinas College, which have incurred higher costs due to the pandemic.
“The CARES Act includes incentives for both those taxpayers who itemize their returns and those who do not,” says Mr. Link. “Taxpayers who itemize will be allowed to deduct all cash charitable contributions that they make, up to 100 percent of their Adjusted Gross Income (AGI). And taxpayers who claim the standard deduction will nonetheless be permitted to deduct up to an additional $300 for singles, or $600 for couples, in charitable contributions.” (Benefactors who give more than 100 percent of their AGIs can carry excess deductions forward for up to five subsequent tax years, but the enhanced deductibility is due to expire after 2021.)
With the year’s end fast approaching, the College’s friends and alumni may want to take advantage of this tax-saving opportunity. “Many of our benefactors choose to make generous gifts during the Advent and Christmas seasons,” says Mr. Link. “If you are one of them, please be sure to make yours by December 31!”
IRA Charitable Rollover
In 2020 Congress exempted Americans over the age of 72 from making a Required Minimum Distribution (RMD) from their Individual Retirement Accounts (IRAs). This exemption came to an end in 2021, however, meaning IRA holders are required, once again, to make an RMD — and that includes paying income tax on the distribution. Yet those who choose to use their IRAs to support the College can avoid the tax charge altogether.
“If you are 70½ or older, simply ask your IRA administrator to make a portion or all of the distribution directly to Thomas Aquinas College,” says Paul Blewett, the College’s director of gift planning. “Our students will benefit immediately from your generosity, and beginning in the year you turn 72, your gift can be used to satisfy all or part of your RMD, up to $100,000 — tax-free.”
Because the distribution generates neither taxable income nor a tax deduction, those who support the College in this way will benefit even if they do not itemize their tax deductions. And husbands and wives who each have their own IRAs are both eligible for the IRA charitable rollover.
“Since your gift to the College will not count as income, it could reduce your annual income level, thereby helping to lower your Medicare premiums and decrease taxes on your Social Security payments,” Mr. Blewett continues. “So this is a wonderful way for our friends to support the College and its students while reducing their tax liability at the same time.”