To be honest, in a normal year, taxes aren’t on my radar until December 31 - at the earliest. It is more likely visions of gifts and cards are dancing in my head; but this year I am paying attention more closely.
Why?
In March, when Congress passed a relief package to shore up the American economy against the ripple effects of COVID 19 they included some one-time changes to tax laws making it more advantageous to donate this year.
I am not a tax professional nor a financial advisor; I don’t even play one on TV. I do have the joy of connecting with generous people like you who also share a passion for honoring the service and sacrifice of the American military. So before making any giving decisions, please be sure to consult your own financial advisors.
Here is what I do know:
This year, Congress added back a $300 charitable tax deduction for each tax return (not per person) taking the standard deduction. If you make a $300 cash donation this year to a qualifying charity, you may reduce your taxes. Your donation will help the charity and the people it serves.
In the past, a donor could be very generous, giving away the majority of their taxable income if you itemize. (S)he could then deduct cash gifts up to 60% of his(er) adjusted gross income (AGI). For this year only, donors can deduct cash gifts up to 100% of their AGI.
For example, a donor who has $100,000 of AGI for 2020 and would like to make a $300,000 cash gift split evenly between three charities. In prior years the donor’s deduction would be limited to $60,000 (60% of AGI). For this year only, the CARES Act allows a charitable contribution deduction of $100,000 (100% of the donor’s AGI). Plus, the donor would still have a $200,000 charitable deduction he or she could carry forward (subject to the old 60% of AGI limit) in the next five tax years.
This change in the tax law is extremely beneficial to donors considering making large gifts in the next few years as well as donors who have annual income, but do not utilize it as they rely on other sources for their living expenses.
Again, please be sure to consult your own financial team before making any decision.
If you have any questions, you can call or email me any time. Congress has gifted us some incredible benefits this year with the 2020 tax code. If you’re looking to make a real, lasting impact with your giving, I can help you make that happen.
Melynda Weaver
Director of Development
melynda.weaver@wearblueruntoremember.org