Amidst the challenges created by the pandemic and the stress of this unprecedented holiday season, here is some good news:
Several tax laws were changed this year through the CARES ACT. These changes may help you with your 2020 tax preparation strategy AND serve Home Start families and children at the same time. Here’s a summary:
1. Unique Tax incentives for charitable contributions will soon expire
- Cash gifts in 2020 come with a limited $300 charitable deduction
The universal charitable deduction is an above-the-line deduction and is available to taxpayers who take the standard deduction. This tax incentive is available for cash gifts to qualified charities (and not to donor advised funds). Note that the $300 is per “tax filing unit,” so even married couples filing jointly deduct $300. – The Stelter Company
- Deductions cap for cash donations is lifted
Contributions to public charities are generally limited to a percentage of a taxpayer’s adjusted gross income (AGI). The law lifted the cap on cash contributions for those who itemize, increasing it from 60% to 100% of AGI for 2020. Any excess contributions available can be carried over to the next five years. For corporations, the law raised the annual limit from 10% to 25% of taxable income. – The Stelter Company
2. Required Minimum Distributions from certain retirement accounts are suspended
The law suspended the requirements for required minimum distributions (RMD) for the 2020 tax year. You may choose to wait until 2021 for the return of the RMD to make qualified charitable distributions (QCD) or it may be most helpful tax-wise to still make your RMD this year — especially since the stock market has been performing so well recently.
For additional questions, contact Mark Lagace, Home Start’s Director of Philanthropy mlagace@home-start.org, or consult your tax advisor.
Ready to make a gift? Please give now to help Home Start serve San Diego children and their families devastated by COVID-19.
Continue to stay safe and healthy this holiday season, and thank you for your compassion for San Diego’s most vulnerable children and families.