The holiday season is coming up and besides preparing gifts for your loved ones, there are other important things you can do. For example, starting a new scholarship! The pandemic has made life difficult for many of us and a scholarship is always a great idea, but now, you have an extra reason to launch one – tax incentives. Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, there are a number of incentives that you can use by the end of the year. So, let’s see how you can actually save money by giving it to others.
By the way, you don’t have to go through the lengthy process of setting up a scholarship. Using our wizard you can launch your scholarships in a few clicks – you can register for free.
Unlimited Deduction for Cash Gifts (until December 31, 2020)
This advantage allows individuals who contribute to a public charity (such as our Future Minds Fund) to deduct up to 100% of their adjusted gross income. Previously, the limit was set to 60%. If you choose not to itemize and instead give a cash gift, you can take a special tax deduction of up to $300. For individual taxpayers, they can carry excess contribution five years ahead.
On the other hand, corporations will be able to deduct up to 25% of taxable income, as opposed to 10% they had before.
To help you out, you can use the Fund Manager (from within the wizard) and with the help of an escrow service, you’ll get all the benefits of a 501(c)(3).
Relief from the Minimum Distribution Requirement
For individual retirement accounts (IRAs), the required minimum distributions (RMDs) are waived. This includes inherited IRAs and other retirement plans like 401(k) and 403(b).
Moreover, you can take cash distributions from your IRA or other plans such as those mentioned above. You can also make deductible gifts by the end of the year without an AGI limitation.
You can still make IRA Qualified Charitable Distributions (QCDs)
If you want to make a qualified charitable distribution (QCD) from your IRA, you can still make one but the minimum age is 70½ and the yearly limit is set to $100,000. It’s also available for 2020 even if the RMDs are suspended.
You can send different types of contributions to donor-advised funds, including checks, stocks or real estate. If you have non-cash assets that you want to simplify and donate with ease, this is the right solution for your needs.
How to get started
If this all sounds confusing and you don’t know where to get started, we’ll show you how. Simply sign up for ScholarshipApp for free and create your first scholarship today! By using our Fund Manager, you can take advantage of our 501(c)(3) status so you can take advantage of all of these tax incentives.
Remember, these tax incentives are only valid by December 31, 2020, so act quickly!