SPECIAL TAX ADVANTAGES FOR CHARITABLE DONATIONS IN 2020 (CARES Act)
The Corona Virus Aid, Relief, and Economic Security Act (CARES Act) was signed into law to provide economic relief for the US. economy during the Covid-19 pandemic and created some special tax advantages for donors to make gifts during the 2020 tax year.
WHAT SHOULD I KNOW ABOUT SPECIAL TAX ADVANTAGES FOR CHARITABLE DONATIONS IN 2020?
- There is a new charitable deduction for non-itemizers: Under the CARES Act, may claim up to $300 in charitable deductions ($600/married couple). It is taken “above the line,” meaning that it reduces your Adjusted Gross Income, resulting in a decreased tax burden.
- For those who itemize deductions: You may deduct up to 100% of your Adjusted Gross Income for cash gifts in 2020 only. This is up from 60% in 2019. This benefit is limited to the 2020 tax year and applies only to gifts to Sun Valley Jazz Jamboree (aka: Sun Valley Jazz & Music Festival) and other public charities. Example: A donor with an AGI of $200,000 could donate $200,000 to Sun Valley Jazz Jamboree and receive a federal income tax deduction of $200,000.
- Donations from IRA’s in 2020: The CARES Act waived the required minimum distribution for the year 2020—there will be no mandatory distributions in 2020 regardless of the age of the donor. However, donors who are 70.5 years or older are still allowed to transfer up to $100,000 to Sun Valley Jazz Jamboree in 2020. The transfer can be used to pay a pledge, and the amount transferred is still excluded from taxable income—with no need to itemize.
- When considering tax matters, we strongly encourage you to review your personal situation with your tax professional.