BONUS TAX DEDUCTION IN 2020 FOR THOSE WHO TAKE THE STANDARD DEDUCTION!


In 2019, the majority of people (87%) took the standard deduction on their income tax filing. Just 13% of people itemized their deductions. That 13% percent was a significant decrease from 33% in 2018 due to the tax reform legislation that increased the standard deduction from $6,500 for individuals to $12,400 and from $13,000 for couples to $24,800. While this is good for people and makes completing your taxes easier, it has had a very big negative impact on nonprofit charities. This tax change resulted in a reduction of $2.92 billion dollars of contributions to charities. The Cares Act of 2020 attempts to help nonprofits regain some of that income.


Did you know that the Cares Act provides that you can take a $300 charitable deduction starting in 2020 even if you do NOT itemize your deductions? So, what this means is, if you make a donation of $300 to a qualified charity and you take the standard deduction of $24,800 for joint filing, you can deduct $25,100 on your tax return without having to itemize your deductions.


In addition, for those who itemize their deductions, to encourage donations to charities, the CARES Act of 2020 increases the previous maximum 60% of adjusted gross income (AGI) charitable contribution limit to 100% of adjusted gross income (AGI) limit for 2020. Therefore, for this 2020 tax year, Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income on their tax report. Contributions that exceed that amount can carry over to the next tax year.


Here is the link to this information on the irs.gov website: https://www.irs.gov/newsroom/how-the-cares-act-changes-deducting-charitable-contributions


If you are looking for a qualified charity, please consider Perpetual Care, a 501(c)(3) nonprofit organization. https://www.perpetualcare.org/donate-now

Thank you!


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