Tax Savings and the Federal CARES Act

April 27, 2020

There are some important new tax incentives now available as a result of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to consider:

  1. Taxpayers who don’t itemize on their Federal income taxes may now deduct up to $300 per year in charitable contributions. Since this is a universal “above-the-line” deduction, taxpayers do not have to file Schedule A (itemize) to claim it. Instead, taxpayers list it as an “adjustment to income” on Schedule 1 of Form 1040 and then deduct it from their “gross income” on their Form 1040. Such deductions must be: in cash (no property like old clothing) or given to a 501(c)(3) public charity (Exclusions: Contributions to non-operating private foundations, support organizations, and donor advised funds.)
  2. Limitations are lifted on charitable contributions by individuals who itemize from 60% of adjusted gross income to 100% of taxable income. They may also choose to carry forward any unused deductions for up to five years. (Donations to donor-advised-funds would not qualify.)
  3. If you are over age 70 1/2 you may still benefit greatly from tax-free Qualified Charitable Distributions from your IRA.  (Up to a maximum of $100,000.)
  4. Charitable deductions by a corporation will see an increase from 10% to 25% of taxable income for 2020 tax year. Donations in excess of 25% may be deducted in the following five years.

First and foremost, we care about you! We urge you to take care of your immediate needs and ensure you have the means to weather this crisis, should it last longer than anticipated. If you are able to and want to make a charitable gift, your donations can make a more immediate impact when they are made locally to help provide local solutions and assistance. Benevilla is a local solution to many needs facing our community during the pandemic and EVERY DAY. Please contact our website or call 623-584-4999 to find out more or to make a donation.