INVESTMENT

Helping others during epidemics


Translating inspiration into action

I am so proud of my mom for finding a way to make a positive impact, and it makes me think about what more I May be done. As a financial advisor, I have seen for myself how the epidemic is affecting clients and their families. I am grateful to be in a position to help them by providing advice and guidance on the financial challenges I am facing. I am fortunate to be able to work with clients in fortunate situations who see the current situation as a call to action to help others. People are helping others in wonderful ways, and many more want to help but don’t know where to start. I realized that one of the ways I can help is to share information about how we can make things easier for victims. So if you’re looking for ways to reduce the burden on friends, family and people in your community during an epidemic, here are some ideas.

Financial gifts

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The IRS allows you to gift up to $ 15,000 per person per year without gift tax. Married couples can collect gifts for a total of $ 30,000 per year. These gifts can go to anyone – family members, friends or even your favorite barista or local restaurant owner who has seen a significant decline in business. If you know someone who is having a hard time, you can give them money directly as a form of help. Of course if you want to give More Compared to the amount of annual exclusion, you can. Just remember that you have to file a gift tax return, and the extra amount will be calculated as your lifetime gift tax deduction (11.4 million).

Medical or tuition costs

In addition to the annual gift tax deduction, there is an unlimited gift tax deduction for eligible medical and tuition costs. This tax-free gift has one important restriction, however: You must pay directly to the medical or educational institution. You cannot repay the recipient for their own payments. If you know someone who is sick or needs help with their health insurance premiums, paying their bills directly is a great way to help.

Charitable contributions

The Coronavirus Assistance, Relief and Economic Security (CARES) Act provides additional incentives for charitable donations. A new “universal cut” allows charitable cuts of up to $ 300 for eligible individuals who do not choose to cut for 2020. সী 300 per limit regardless of filing status. If you itemize, you can deduct a cash contribution of up to 100% of your total gross income for 2020 (this is usually limited to 0%). Theoretically, this means you can offset all your income and have zero tax liability if you pay enough.

Eligible Charitable Delivery (QCDs)

Thanks to the Care Act, the required minimum distribution (RMDs) has been temporarily waived for 2020. Under normal circumstances, you need to start taking the minimum distribution from your tax-suspended retirement account when you reach the age of 2 (age 70- if you become 70½ before 2020). Although RMD is not required in 2020, you are allowed to make a tax-free donation (up to $ 100,000) directly to a qualified charity directly from your IRA if you are over 70½. If you’re looking for organizations that are helping you in need during an epidemic, Vanguard Charitable has plenty of resources and proven charities to help narrow down your search. While creating a QCD is still an option, tax incentives for donating from a taxable account will probably be a more attractive option for most people. Here are some reasons why you may still want to take QCD in 2020, but be sure to consult an advisor or tax professional about your unique situation:

  • You estimate that avoiding your RMD in 2020 will increase your taxes in the future. Higher RMD adoption may also increase in the future:
    • Your premium for Medicare Parts B & D.
    • Taxable part of your social security benefits.
    • Gain your eligible dividend income and long-term capital.
  • You are hoping that your tax rate will increase in the near future or you want to move to a state with higher income tax.
  • You want to donate to a charity but there are not enough taxable resources to donate.

Cash donation and a conversion

Since RMDs cannot be converted to Roth IRA, 2020 presents a unique opportunity for individuals over the age of 72 to reduce their taxable IRA balance, including Roth IRA conversions and cash donations from taxable accounts. The chariot will be convertible, but cash donations can cover some tax liabilities if you itemize your deductions. It can benefit from short and long term planning better than adopting QCD.

There is more to it than money

If you are not in a position to provide financial assistance, fine. Like my mom, you can find other ways to differentiate your resources, skills and time. Think creatively. Those affected by the epidemic will appreciate what you can do to help.

Ready to make a difference?

Vanguard Personal Advisor Service: You get access to an advisor whenever you need one – and they will always work.
Your best interests. We will help you get the most out of your donations.

Comments:

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Diversity does not guarantee gain or protect from loss.

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