![]() If the taxpayer elects to treat only three of the 2020 charitable contributions as eligible contributions for the 100% limit in 2020, the remaining $120,000 will be subject to the 60% limitation of $150,000 × 60% = $90,000. The taxpayer's charitable contribution base (i.e., AGI without regard to any net operating loss carryback) is $150,000. For example, assume that a taxpayer has adjusted gross income (AGI) of $150,000 in 2020 and has itemized deductions of $10,000 of state taxes and $20,000 of deductible mortgage interest and makes cash charitable donations of $10,000 each to 15 qualified charities in 2020. While the percentage limit has been temporarily increased to 100% for qualified contributions, taxpayers can make the qualified contribution election separately for each contribution and thus do not have to elect to treat all of their charitable contributions that would otherwise qualify as qualified contributions if they would not receive a tax benefit from doing so. For 2020 only, this limit has been raised to 100% under Section 2205 of the CARES Act for qualified contributions (cash donations to a public charity that is not a donor- advised fund or a supporting organization that the taxpayer elects to treat as qualified contributions). 1, 2026 (for cash contributions to public charities and private operating foundations). 115- 97, the rule that limits the charitable deduction to 50% of the donor's charitable contribution base increased to 60% for tax years beginning after Dec. Under the law known as the Tax Cuts and Jobs Act, P.L. ![]() Though there is not a direct income tax savings in 2020 for making qualified charitable distributions, reducing the value of the IRA through charitable gifting may be a benefit to an overall estate plan for those with taxable estates who are also charitably minded.įor those who itemize, the potential benefits of charitable giving are even greater. This rule applies regardless of whether the taxpayer itemizes. Even though required minimum distributions from IRAs were suspended for 2020, an eligible individual may make direct charitable donations from his or her IRA in 2020, and the direct charitable distribution of up to a maximum of $100,000 will not be included in income (the charitable donation will not be deductible). The $300 limit applies to the tax- filing unit, so for those who file married filing jointly, the maximum above- the- line deduction is $300.įor those who are over age 70½, qualified charitable distributions from an IRA of up to $100,000 are still allowable in 2020. ![]() Section 2204 of the CARES Act allows for an above- the- line deduction of up to $300 per taxpayer for a cash donation to a public charity (other than a donor- advised fund or supporting organization under Sec. Even taxpayers who do not itemize can benefit in 2020 from a charitable deduction. As clients look for last- minute tax- saving strategies in 2020, one area that should be considered involves the changes to the charitable giving rules made by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L.
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