As 2020 ends, the conclusion of the CARES Act also looms. It is not too late to take advantage of some of the unique benefits and opportunities this act offers, especially when it comes to your taxes. Here are a few benefits to take advantage of before the year ends.
Charitable Contribution Deductions
As an incentive to increase charitable giving during these difficult times, the CARES Act offers higher deduction limits for individuals and businesses this year. In 2020, anyone can claim up to $300 in cash donations to specific charities on their taxes, and those who itemize their deductions can benefit even more. Normally, it is only possible to deduct up to 60% of your annual adjusted gross income (AGI) with cash donations, but this year, that limit has risen to 100%. Businesses are also able to deduct up to 25% (up from 10% in normal years) of charitable cash donations from their income.
While most healthcare benefits will likely extend through to the end of the pandemic, it does not hurt to take advantage of the remote options and free COVID-19 testing between now and the end of the year. You can continue protecting your health as well as the health of your family by opting for flexible healthcare options. Be sure to contact your insurance and healthcare providers to identify how the new year could change your service.
Annual Minimum Retirement Distribution
If you haven’t yet taken your annual minimum distribution and are in good financial standing, you have the option of waiving this year’s distribution, limiting your taxable income and granting your retirement fund more opportunities for tax deferred growth. Retirees who have not taken their distribution for this year may find it fruitful to wait until 2021.
Low Interest Rates
While the pandemic has presented financial difficulties for many individuals, businesses, and industries, it has also presented numerous opportunities when it comes to estate planning. The historically low interest rates, as well as unique lifetime gift and estate tax exemptions, present a great opportunity for individuals to plan ahead without jeopardizing their financial health or their assets. While these features will not disappear at the start of the new year, political changes and pandemic developments could influence the interest rates and the projected expiration of tax exemptions; now is the time to take advantage of these opportunities.
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