As youâ€™re wrapping upÂ finances for theÂ year,Â consider making a cash gift to your favorite charity. One provision of theÂ CARES ActÂ allows you toÂ take an extraÂ deductionÂ on yourÂ federal income tax returnÂ in 2020, even if you donâ€™tÂ itemize.Â Since many nonprofits are hurtingÂ due to the pandemic,Â aÂ smallÂ donationÂ will help them and help you with an extra tax breakâ€”welcome newsÂ inÂ timesÂ of financialÂ 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?
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