COVID-19 has disrupted many areas of daily life in 2020 – even year-end tax planning is not immune. Congress passed the $2.2 trillion CARES Act in late March to provide economic relief for American businesses and taxpayers affected by the coronavirus. The CARES Act included a whole host of tools to stimulate the economy including stimulus checks, extended unemployment benefits, and the Paycheck Protection Program.
One important provision of the CARES Act that we haven’t heard as much about is an increase to charitable giving tax benefits. For this tax year only, the CARES Act increases the tax benefits of charitable giving in the following ways:
Corporations can deduct up to 25% of their taxable income as charitable giving.
Taxpayers who itemize their deductions can deduct up to 100% of their adjusted gross income (AGI) as charitable giving. This could potentially allow donors to have a taxable income of zero.
Taxpayers who take the standard deduction can also take an additional above-the-line charitable giving deduction of $300 for an individual or $600 for a married couple filing jointly. Above-the-line deductions are subtracted from a taxpayer’s gross income.
Regardless of your tax situation, the CARES Act provides benefits for increasing your charitable giving in 2020. You should always consult with a trusted accountant or financial planner before making financial decisions. If you have any questions about ways to increase your giving and take advantage of these tax incentives, please contact Ashley Garner at agarner@cffgr.org.