By Patrick Schmitt and Michael Kassabian
The year 2020 has been one of so many questions: When will things return to normal? Do I qualify for the stimulus check? Where did I put my mask?
And, how can I be fiscally responsible while still supporting a favorite cause, like hearing and balance science? The good news is that you can do both at the same time, thanks to recent legislation. In March 2020, Congress passed the CARES Act to provide economic assistance in response to the COVID-19 pandemic. (CARES stands for Coronavirus Aid, Relief, and Economic Security.)
You may remember the stimulus aid given to qualifying Americans—but the law’s effects, and potential benefits for you, reach far beyond those checks. Here’s how to take advantage of savings as you consider end-of-year giving.
Thanks to recent legislation, you can be fiscally responsible while supporting a favorite cause, like hearing and balance research.
Take an additional income tax charitable deduction. Donors who do not itemize can now deduct cash gifts (including gifts by check, credit card, or electronic funds transfer) up to $300 above the standard deduction for charitable contributions per household.
RMDs are suspended, but IRA gifts are still a smart way to give. For people with individual retirement accounts (IRAs), there are no required minimum distributions (RMDs) this year. However, giving pre-tax funds out of your IRA will still lower your future tax burden compared with giving cash. If you’re age 70 1/2 or older, giving from your IRA is still a tax-savvy way to support your favorite causes this year!
If you’re interested in giving from your IRA to Hearing Health Foundation, we have a free tool to help you learn more, get started on your gift, or request a tax acknowledgment letter for a gift you’ve already made. Please see freewill.com/qcd/hhf.
There is an increase in the AGI limit for donors who itemize. If you itemize on your tax bill, you can deduct cash gifts to public charities up to 100 percent (vs. 60 percent before the CARES Act) of your adjusted gross income (AGI). This deduction may be reduced by other itemized deductions, but any unused deduction can still be carried over for up to five additional years.
The limit for cash contributions from corporations has increased. Corporations can designate up to 25 percent (vs. 10 percent) of their taxable income in 2020 for cash gifts to public charities. And while other contributions to charities reduce this limit dollar for dollar, cash contributions that are more than the 25 percent limit can still be carried over for up to five additional years.
Please reach out to a tax adviser to understand how these changes affect your specific situation. We hope you can use this information and free resources to best support your savings, and Hearing Health Foundation, this year.
This article is provided for informational purposes only. It should not be construed or relied upon as legal or tax advice. Patrick Schmitt (far left) is a cofounder and co-CEO of FreeWill, where Michael Kassabian is a content associate. For more, see freewill.com/hhf or email development@hhf.org.
