Don't Miss These Two Deductions in 2020

Coronavirus Aid, Relief, and Economic Security (CARES) Act creates two new tax benefits for donors to non-profits; up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions. This is available only to people who take the standard deduction (for taxpayers who do not itemize their deductions). It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI), and thereby reduce taxable income. The second change lifts the cap on how much a donor can deduct in charitable gifts in a single year. Until the 2017 Tax Cuts and Jobs Act (TCJA), individuals could immediately deduct gifts valued at no more than half their adjusted gross income (AGI), with the excess deductible in future years. The TCJA boosted the cap to 60 percent of AGI, and the CARES Act eliminates the cap entirely for 2020. Thus, a donor can fully deduct gifts equal to as much as 100 percent of their AGI this year. Good news for folks who make charitable donations but are  not able to itemize their deductions on the federal return. Questions? Contact Kim Kelly today.