When the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law in March, it broadened charitable tax deduction opportunities. These special 2020 tax provisions are worth reviewing before they expire on December 31, 2020.
First and foremost, the CARES Act allows individuals and couples taking the standard federal income tax deduction to claim an additional charitable federal tax deduction of up to $300 in cash gifts made to charities. This charitable deduction can be taken even if you don’t itemize, and the limit increases to $600 for married couples. (This deduction is “above-the-line,” which means that the deducted amount is simply subtracted from your 2020 gross income.)
If you do itemize your deductions, note that the CARES Act allows you to offset as much as 100% of your adjusted gross income (AGI) for most cash gifts to public charities this year, up from the normal 60%. Charitable gifts made in 2020 above this amount may optionally be carried forward for as long as five years, subject to the usual 60% of AGI deduction limit in years ahead.
Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, or accounting professional before modifying your charitable giving strategy.1
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
1 – Forbes, October 28, 2020