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Don’t Miss Your Last Chance to Maximize Cash Contributions Under the CARES ACT

December 16, 2021

As the end of the year approaches, you may be thinking about tax-smart ways to meet your charitable giving goals. This year, cash donations may offer one of the best tax-savings opportunities, thanks to certain provisions under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, which were extended for 2021.1 However, you’ll have to act fast since these provisions expire at year-end.

  • Taxpayers may deduct up to 100% of AGI in 2021. Individual taxpayers who plan to itemize on their tax returns may deduct qualified contributions of up to 100% of their adjusted gross income (AGI) this year. The limit for cash gifts will revert to 60% of AGI next year. While this may offer a significant opportunity for certain taxpayers to close the gap on taxes while maximizing their charitable giving goals, remember, taxes alone should never drive your financial decisions. That’s one of many reasons why ongoing tax planning is an important part of a comprehensive approach to wealth planning.
  • Those who don’t itemize are still eligible for a deduction. Typically, if you don’t itemize, you can’t deduct charitable donations. However, the CARES Act allowed taxpayers who claimed the standard deduction to deduct up to $300 of cash donations made to qualified charities in 2020. That provision was extended for 2021. An additional deduction of up to $600 for married couples filing jointly was added this year.

To qualify under these special provisions, cash donations must be made by December 31. According to the IRS, cash contributions include those made by check, credit card, or debit card as well as unreimbursed out-of-pocket expenses incurred in connection with volunteer services to a qualifying charitable organization. Cash contributions don't include the value of volunteer services, securities, household items, or other property.

Keep in mind, to qualify for a tax deduction, charitable donations can only be made to tax-exempt organizations, as defined by section 501(c)(3) of the Internal Revenue Code. Since many nonprofits are not qualified tax-exempt organizations, it’s important to check an organization’s status before you donate. To determine if a charity is eligible to receive tax-deductible contributions under the IRS guidelines, access the IRS search tool here.

Always consult a tax professional before making decisions that could impact your tax exposure. To learn more about strategies that can help you pursue your tax planning and charitable giving goals, contact the office to schedule time to talk.

1 http://www.irs.gov/newsroom/year-end-giving-reminder-special-tax-deduction-helpsmost-people-give-up-to-600-to-charity-even-if-they-don't-itemize

How Exercise Can Help Ease the Holiday Blues

While the holidays can be a time of joy and excitement, they can also trigger feelings of sadness, anxiety, loneliness, and depression. These feelings are commonly referred to as the “holiday blues.”

Feeling blue? You’re not alone.

The added stress and fatigue from juggling too many tasks and responsibilities during the holidays, as well as seasonal factors, such as shorter days and reduced sunlight, can contribute to feeling blue. The COVID-19 healthcare crisis has made the holidays even more challenging for many. Throughout the pandemic, healthcare providers have seen a major uptick in the number of U.S. adults reporting symptoms of stress, anxiety, depression, and insomnia.1 There are many reasons for this from the way the pandemic has altered daily routines, to financial pressures, social isolation, and concerns about the health of family members and loved ones.

No matter the underlying reason why you (or a loved one) may be experiencing the blues, it’s important to focus on self-care and getting the help you need to cope. Many people have found that adding exercise to their daily routines can help lessen or alleviate many of these symptoms. One reason is that physical activity is known to increase the brain’s endorphins or “feel good” hormones.

Exercise packs important short- and long-term benefits

Over the short term, exercise can reduce feelings of anxiety. That’s why even a short walk around the block or shopping mall can often help you feel less stressed or anxious. Regular exercise has been found to improve thinking and cognition and can help sharpen judgment skills as you age. Emerging research also suggests that physical activity can also boost immune function over time. According to the CDC, even a single session of moderate-to-vigorous physical activity provides immediate benefits for your health, including improved sleep quality, reduced feelings of anxiety, and reduced blood pressure.2

Fortunately, working physical activity into your busy schedule doesn’t require a significant time commitment. For example, if you want to walk 30 minutes a day, combine that with time spent holiday shopping or running errands—or break it into three 10-minute walks on days when you’re really pressed for time. Remember, whether you choose to spend time walking, swimming, dancing, or weightlifting, exercise of any kind provides significant benefits for your body, mind, and mood.

Know where to get help

If you or someone you know is struggling emotionally, has concerns about their mental health, or is experiencing thoughts of suicide, don’t wait to reach out for help. Contact your doctor, a mental health professional, or the National Suicide Prevention Lifeline at 1.800.273.8255, which is one of many organizations that can provide immediate emotional support and helpful resources.

1 http://www.mayoclinic.org/diseases-conditions/coronavirus/in-depth/mental-healthcovid-19/art-20482731

2 http://www.cdc.gov/physicalactivity/basics/pa-health/index.htm#brain-health

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