In a time when our world is experiencing the unimaginable, giving back is more important than ever. With the coronavirus pandemic taking a toll on an increased number of individuals, charitable organizations are in need of additional funds in order to continue providing their services to those affected. The ninth annual #GivingTuesday will take place on Tuesday, December 1st, 2020. Anyone can participate in the #GivingTuesday campaign, whether it be through social media influencing, volunteering, donating goods or services, or monetary contributions. This year, #GivingTuesday is being used as a platform to raise awareness and funds for charitable organizations, but to also bring communities together through generosity and giving back amid the pandemic.
The CARES Act (“Act”) has temporarily suspended certain rules and limitations placed on cash charitable contributions, making it more tax advantageous to donate. Prior to the Act, individuals could deduct up to 60% of their adjusted gross income (“AGI”) for cash charitable donations. The Act has increased the amount from 60% to 100% of AGI. In addition, corporations can deduct charitable contributions up to 25% of its taxable income whereas prior law limited the amount to 10%.
Another temporary provision of he CARES Act is that taxpayers who do not itemize, will be allowed up to a a $300 deduction for cash charitable contributions made in 2020. The deduction is allowed as an above the line deduction in determining taxable income.
To ensure that the donation is made to an eligible charitable organization, the Internal Revenue Service (IRS) provides the IRS Tax Exempt Organization Search (formerly Select Check) tool on IRS.gov. The Tax-Exempt Organization Search tool is a searchable online database that lists most eligible charitable organizations. Taxpayers who give money or goods to a charity by December 31, 2020 may be able to claim a deduction on their 2020 federal income tax return and reduce their taxes.
For additional information, please contact any of your trusted advisors at HHM today.