After planning for their financial security, one of the most common goals of retirees is to give back to the causes they are passionate about. This often includes remaining active in the community and pitching in with hands-on volunteerism.
With the coronavirus pandemic forcing people to stay at home, volunteering in person may not be a safe option right now, especially if you’re in a higher-risk category. But that doesn’t mean you can’t give back. At the same time, you don’t want your giving strategy to put a dent in your budget, especially when you’re living on a fixed income. Here are four things you should consider about charitable giving to make sure you also keep your retirement strategy on track.
1. Know the new rules for gifts
In March 2020, the federal Coronavirus Relief, Aid, and Economic Security (CARES) Act was passed to provide financial support to individuals and businesses during the pandemic. It has a couple of components that affect annual charitable giving for 2020.
- You can deduct up to 100% of your 2020 adjusted gross income (AGI) for cash gifts to public charities (up from the usual 60%). If the value of your gifts exceeds 100% of your AGI, you will carry any excess gift amounts into next year.
- If you do not itemize deductions on your federal tax return, you can now take a charitable deduction of up to $300 for cash donations made to qualified organizations in 2020. This change benefits those who typically do not itemize their deductions and therefore typically do not receive a tax benefit from their charitable contributions.
When you give back in 2020, keep the CARES Act in mind as you file your taxes. You’ll also want to watch for potential changes to the rules around gifts in 2021.