Caring for and supporting others is necessary for a healthy soul, mind, and community. Every year is a good year to give our time or money to those in need.
We all know 2020 has been a unique year. Whether or not you’re accustomed to making financial donations, there are some extra incentives in 2020 that make it the year to give!
1. You can claim an extra $300 charitable deduction
In 2020, the standard deduction for a single filer is $12,400 and $24,800 for joint filers. For single filers, this means that the first $12,400 of your income is not taxed at all IF you choose to take the standard deduction!
Alternatively, you can itemize. That means you list each one of your tax deductions and hope it adds up to more than $12,400. You can itemize charitable contributions, business travel expenses, mortgage interest, etc. (You can see more from the IRS.)
It’s estimated that less than 14% of Americans get to claim charitable deductions on their tax returns. Why? Because most Americans take the standard deduction instead of itemizing.
Again, most people’s charitable contributions and other deductions aren’t large enough, so their gifts never really “count” for tax purposes ☹
Happy news!! In 2020, you can get an additional $300 charitable deduction EVEN if you take the standard deduction! That means if you gave at least $300 to a qualified charity, your deduction now gets to be $12,700. Now that’s some motivation to give if you’re able!
2. You can give (and deduct) 40% more of your income in 2020!
Not only do some gifts not count because they are too “small,” some people’s gifts are not fully deductible because they are too big! Yes, it’s crazy but true.
Normally, you can only deduct cash gifts up to 60% of your Adjusted Gross Income (AGI). For most of us, this rule isn’t usually a problem. I mean, I try to be generous, but I have never donated 60% of my income before!
Here is an example of who it might limit:
Your grandma’s only annual income is $18,000 from Social Security and $10,000 from dividends. That means her AGI is $28,000.
Grandma has a lot more cash in the bank than her AGI, and she feels compelled to give to her favorite charity. She wants to leave a legacy and donate $20,000 to make a difference while she is alive to see it! Unfortunately, only $16,800 of Grandma’s gift is tax deductible in normal years (60% of $28,000).
However, in 2020, Grandma can deduct a cash gift up to 100% of her AGI! This is great news for those whose annual income can sometimes prevent them from getting full tax benefits on their generous donations.
3. It will help you beat the COVID funk
Friends have told me that they have just been feeling kinda blah lately. It’s much easier to have a bad day than it used to be.
Side Story About My Life:
A few weeks back, I was so disappointed that our vending machine didn’t have Skittles. Ugh. What a bummer. THEN I heard about conflict over Ohio’s new mask mandate. Oh, I just wish drama would go away! The cherry on top was finding out the county fair was canceled, and I wouldn’t get the fried tenderloin I was already looking forward to. Gasp! Utter devastation!
Honestly… those tiny (pathetic) little inconveniences put me in the worst mood! I do think the compounding of COVID anxiety just built up. Looking back, I’m embarrassed I let my day and mood be controlled so easily.
(I must give myself a little break though… sometimes a pregnant lady just needs Skittles and fried fair food…)
There are numerous studies that show giving to those in need can promote mental, emotional, and even physical health!
Cleveland Clinic claims that some of these benefits include lower blood pressure, increased self-esteem, less depression, lower stress levels, longer life, and greater happiness. Sign me up for that!
These benefits come from giving of your time and energy – not just your money! You don’t have to be wealthy to glean the benefits of a generous lifestyle.
Maybe if I had taken more time to serve others, I wouldn’t have been so devastated over the loss of fried food…
The tax benefits in 2020 are temporary features of the CARES Act. You made have heard it referred to as the COVID-19 Stimulus. The Act was MUCH more than just a stimulus check. Read about it HERE.
For more positive thoughts and motivations, read How to Exercise Control During These Crazy Times.
If you give regularly to your church, read my thoughts on 3 Ways You Might Tithe in Retirement.
Let’s all just make the best of 2020 as possible!