giving to charity

You’re probably looking forward to Thanksgiving, even if it looks a bit different this year or you’re not a big fan of turkey. Whatever your Thanksgiving is like this year, it’s a good time to think about how you express gratitude. Some people donate their time or money to a charitable organization, especially around the holidays. In 2019, Americans gave an estimated $450 billion to U.S. charities[1], and this number was expected to rise in 2020 before the pandemic hit. This year, there are some special opportunities for charitable giving before year-end that you can potentially take advantage of. 

Tax-Free Donation Limit Increase for 2020

The CARES Act created special opportunities for charitable giving only for the 2020 tax year. Normally, there is a cap – 60% of a taxpayer’s Adjusted Gross Income (AGI) – on how much someone can donate to charity tax-free. The CARES Act raised this limit to 100% of AGI for the 2020 tax year.[2] Contributions over this amount can be carried forward for five years subject to the usual 60% of AGI limit in those years.[3] There is also a provision that allows single filers who don’t itemize to deduct up to $300 in charitable donations, and married couples filing jointly to deduct up to $600.[4] The deadline to make charitable contributions for 2020 is December 31st, so mark your calendar. Note that these provisions only apply to cash donations and to not donor-advised funds or gifts to 509(a)(3) supporting organizations.[5]

Incorporating a Giving Strategy Within Your Estate Plan

Another potential option for giving is taking advantage of the annual gift tax exclusion limit of $15,000. You don’t have to itemize your taxes to do this. This means you can gift up to $15,000 a year tax-free per person each year.[6] This can be one way to reduce your taxable estate and give to your loved ones during your lifetime. Note that what you give tax-free counts towards your total gift and estate tax exemption limit, which is $11.58 million for individuals and $23.16 million for married couples in 2020.[7]

Watch Out for Scams

Many charities are stepping up to help those in need during the COVID-19 pandemic, but scams have also proliferated. It’s important to make sure you are giving to a legitimate charity, and there are several ways you can do so. One is to research the charity online to check on their reputation. You should also check that it’s not a fake organization with a name very similar to a real charitable one. You can also check the IRS’s Tax Exempt Organization list to see if donations are tax-deductible.

If you’re not sure if your retirement plan is as well orchestrated as your Thanksgiving dinner is, maybe it’s time we talk. Whether you want to give to a charity, retire earlier, or maintain your current lifestyle, we want to help you create a retirement plan that makes you feel thankful and helps to achieve your retirement goals. Schedule a time to meet with us to hear more about your retirement planning options, and have a Happy Thanksgiving!

[1] https://home.treasury.gov/news/press-releases/sm1040

[2] https://www.congress.gov/bill/116th-congress/senate-bill/3548/text#id2086895433d24741b0e50236bb117cff

[3] https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions#:~:text=In%20most%20cases%2C%20the%20amount,not%20subject%20to%20this%20limitation.

[4] (Sec. 2205) https://www.congress.gov/bill/116th-congress/house-bill/748

[5] https://www.forbes.com/sites/rcarson/2020/10/28/how-to-make-sure-every-dollar-you-give-to-charity-counts-in-2020/?sh=3cc1bcf03b67

[6] https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax

[7] https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax

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Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.

 


The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by tMedia, LLC, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. tMedia, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.
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