New Tax Advantages for Donors
Did you know that there is a new universal tax break for charitable donations included in the COVID-19 stimulus package that was signed into law earlier in 2020? What does this mean for YOU and People Working Cooperatively? This new financial incentive benefits qualifying charities, including PWC, and allows you to be even more generous in this difficult time while offering you the ability to claim a deduction starting with the 2020 tax year.
The law grants taxpayers an above-the-line deduction for up to $300 in charitable donations given in 2020. For example, if you take the standard deduction and give $300 to charity, you will get a $300 tax break in addition to the standard deduction.
Here is the tax benefit break down for those taking standard deductions or itemized deductions:
For people who take the standard deduction, the CARES ACT allows you to take a tax deduction for contributions made to qualified charitable entities up to $300 per year starting in 2020 – this deduction is “above-the-line.” The 2020 Standard deduction is $12,400 for individuals and $24,800 for married couples filing jointly. Therefore, any donation to qualifying charities of up to $300 will be added to the standard rate of deduction. This deduction applies for 2020 and beyond.
For people who file for itemized deductions, the CARES ACT allows you to take a tax deduction of up to 100% of your Adjusted Gross Income (AGI) for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits on charitable giving from 60% of a taxpayer’s AGI to 100% for 2020.