The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a number of specific changes that may impact your financial charitable giving strategy.
Among the changes in the CARES Act: a $300 above-the-line charitable deduction for those taking the standard deduction. In addition, the adjusted gross income (AGI) limit for charitable donations has been repealed.
Learn more about the specifics behind these changes from Katie Villegas, CFP®, CSRIC™, and financial advisor at Old Peak Finance:
Many people have donor-advised funds. A DAF is typically invested in a mix of stocks, bonds and cash pending awards to a non-profit. Consider using bonds or cash, not stock, when you make donations from your DAF, in light of recent stock market declines. Contact us if you have questions about your Donor Advised Fund or charitable giving. We are here to help you.
A transcript of this audio can be found here.
The CARES Act: What You Need To Know About The Impact On Charitable Giving
Hi, I'm Katie Villegas, a Certified Financial Planner Professional with Old Peak Finance. Old Peak provides comprehensive financial planning for busy professionals and business owners.
In this brief video, I'm going to talk about some charitable giving changes from the recent stimulus package.
The first major change is that this creates a $300 above-the-line deduction for charitable contributions starting in 2020. Now you must be a filer taking the standard deduction; contributions must be made in cash; and gifts cannot be used to fund donor advised funds.
Now, while this won't create a huge tax savings, but since 90 percent of taxpayers now use the standard deduction, many people can take advantage of this change.
The second major change is that the adjusted gross income limit for cash charitable contributions has been temporarily repealed. So before this new Act, you are able to deduct cash contributions only up to 60% of your AGI, and this act increases this to a 100%. And if you have contributions that exceed this amount, the excess can be carried forward for up to five years.
Now, for those of you who have donor advised funds, we have a tip for you, during this downturn in the markets. Most of you will have a mix of investments in your DAF or donor advised fund, a couple stock funds, maybe a bond fund, money market and at Schwab where our clients typically have their DAFs. when you make a donation, the default is to sell from all of your funds pro-rata, but you can actually choose which funds to sell from. So we urge you to consider selling bonds or a money market fund and conserve your stock for the eventual market rebound. And in the future we can help you rebalance to continue to have an appropriate mix for your giving time horizon.
So thank you for listening. If you have questions, please reach out and you can find us online at oldpeakfinance.com
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