Every Tax-Payer Can Be a Philanthropist

This Is the Tax Year to Be Philanthropic!

In March, Congress passed new tax laws in the Coronavirus Aid, Relief and Economic Security (CARES) Act in the effort to encourage charitable giving. Here are some of the ways you can take advantage of this opportunity and support your favorite causes:

Special Options for the 2020 Tax Year

The “Universal Deduction” measure lets some Americans deduct up to $300 in charitable donations from their taxable income; this is particularly beneficial to the 85% of Americans who take the standard deduction when filing their taxes (in other words, taxpayers who do not itemize their deductions). It is calculated by subtracting the amount of the donation from your gross income. The result is a reduction of your adjusted gross income and therefore a reduction of taxable income.

Donors who itemize their tax returns may now deduct up to 100% of their adjusted gross income (AGI) for charitable gifts made in cash (increased from 60%). The CARES Act temporarily increases the individual AGI limits for cash contributions made to qualified public charities in 2020.

Ongoing Tax Savings

Donors aged 70 and a half years old or older have the can make a qualified charitable distribution (QCD) from individual retirement accounts. Donors may give as much as $100,000 directly from an IRA plan to a qualified charity. As this gift goes directly to the charity, it will not impact the AGI, which determines the individual tax payers’ tax bracket.

Donors who make gifts of appreciated stock may eliminate capital gains tax on the appreciated values and may receive a tax deduction for the fair-market-value of the appreciated asset.

This has never been a better time to make a gift to a tax-exempt organization!

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This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor.

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