The CARES Act has been in the news a lot, but did you know it may also affect your charitable giving? Here are some key parts of the CARES Act you will want to consider as you plan your gifts this year:
- You do not have to take a Required Minimum Distribution (RMD) this year!
The biggest change to your IRA this year is that your RMD has been suspended. Under the CARES Act, no one is required to take an RMD from their IRA in 2020. However, RMDs from some defined-benefit pension plans are still required, so check with your financial advisor to see how this rule applies to you. If you were required to take an RMD in 2019, it will resume in 2021. New RMDs will begin in 2021 for anyone turning age 72 in that year.
- You can still leverage your Charitable IRA Rollover!
Your Required Minimum Distribution may not be required this year, but if you are over age 70 1/2, your IRA is still available for charitable giving. This is a great way to set yourself up for a lower tax bill next year because any distributions you make from your IRA this year will decrease your RMD calculation for 2021.
- You can deduct up to $300 of charitable giving, even if you don’t itemize.
Even if you take the standard deduction, you can still reduce your taxable income by deducting up to $300 of cash gifts to public charities using an “above the line” adjustment to reduce your taxable income. If you decide to itemize, you may be able to deduct even more
- If you are considering a larger charitable gift, this is a great year to do it!
For this tax year only, you can deduct cash contributions to Plan International USA and most other public charities to offset up to 100% of your taxable income. Typically, this deduction would be limited to 60% of your income. This benefit applies to cash gifts only and there are special rules for gifts of stock. Contributions to your Donor-Advised Fund do not qualify for this enhanced deduction.
This has been a year of unprecedented challenges — but it could also be a year of unprecedented opportunities. Now, more than ever, your charitable gifts matter, and they can make a significant difference in the lives of girls around the world.
The COVID-19 pandemic has created needs of all sizes in every community — and you can help! Check out some of the ways you can change a girl’s life with a gift to Plan today.