As you’re wrapping up finances for the year, consider making a cash gift to your favorite charity. One provision of the CARES Act allows you to take an extra deduction on your federal income tax return in 2020, even if you don’t itemize. Since many nonprofits are hurting due to the pandemic, a small donation will help them and help you with an extra tax break—welcome news in times of financial unease.
Specifically, a new charitable deduction is available in 2020 for individual taxpayers that do not claim itemized deductions on their Form 1040. Up to $300 per taxpayer, (and $600 for joint filers,) is available as an above the line deduction, reducing taxable income in addition to the standard deduction.
As part of the CARES Act legislation, individuals that itemize deductions are also allowed to deduct higher charitable donation amounts as a percentage of their adjusted gross income (AGI). Individuals can elect to deduct up to 100% of their 2020 AGI, up from 60% in past years. However, this increased limit only applies to cash gifts given to a public charity and is not available for cash donations made to a Donor Advised Fund, supporting organizations, or private charities.
Questions on Charitable Giving?
REDW advisors welcome your questions on charitable giving and other benefits provided by the CARES Act. Please contact Craig Neumann or Christina Roderick for more information.
REDW is committed to keeping you informed at all times, and especially through the impacts of the COVID-19 pandemic. Stay connected with us on LinkedIn and @REDWLLC on Twitter. Access some of our other updates on our COVID-19 Resource Hub.
