CARES Act Benefits
The CARES Act means a lot more people can receive a tax benefit by giving.
Information shared from Kiplinger.
PERSONAL FINANCE: 5 CARES Act Benefits to Take Advantage of Before Year’s End
If you haven’t taken action yet, there is still some time to make the most of the CARES Act benefits, including charitable tax deductions and penalty-free early IRA withdrawals. (Abridged)
by: Pam Krueger October 26, 2020
When you think about the actions the U.S. government has taken to help stem the economic damage caused by the COVID-19 pandemic, many benefits were made possible by the Coronavirus Aid, Relief and Economic Security (CARES) Act, which was enacted in March. Many of these benefits have expired and may not be renewed. But some of them are still available. Here are five CARES Act benefits you may want to consider taking advantage of before year’s end.
1. Give more – and get more tax benefits
This year, the CARES Act lets anyone deduct up to $300 in cash donations they make to qualified charities. And if you can itemize, the tax benefits are even better. You can deduct all of your cash donations, up to 100% of your adjusted gross income (AGI). Normally, this limit is 60% of AGI. Businesses benefit, too. They can deduct up to 25% of qualified charitable cash contributions from their taxable income. Before the CARES Act, this limit was 10%.
And, unlike most CARES Act provisions, which expire at the end of 2020, these special charitable tax benefits will also be available for donations you make next year.
2. Don’t need your annual retirement distribution? Waive it!
If you’ve started taking annual required minimum distributions (RMDs) from your 401(k) plans and IRAs but haven’t taken this year’s distribution yet, you may be in luck. That’s because in 2020 only you don’t have to take this distribution. If you don’t need this money to live on, consider waiving your RMD. Doing so will keep this distribution from increasing your taxable income. And, more importantly, keeping this money invested will give it another year to grow tax deferred.
If you want to waive the RMD, you should contact your IRA or 401(k) plan provider or your financial adviser to let them know as soon as possible, especially if your accounts are set up to automatically make your 2020 distribution in December. Unfortunately, if you already took your RMD this year the deadline has passed for you to recontribute this amount.
Read the full Kiplinger article outlining all five key benefits.
About The Author
Pam Krueger Founder, Wealthramp is the creator of the award-winning MoneyTrack investor-education television series seen nationally on over 250 PBS stations. This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.