In March 2020, in response to the COVID-19 pandemic, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. One aspect of this bill was to encourage more charitable giving in 2020 and to help nonprofit and other charitable organizations recover from the economic and systematic implications of the pandemic. To incentivize charitable giving by individuals in 2020, the CARES Act provides additional tax relief for donors on their 2020 tax return.
Below are a few tips to maximize your tax-deductible gifts this year.
If you claim the standard deduction:
You may claim up to $300 in above the line deductions for qualified charitable contributions.
This means that even if you do not itemize your tax return, you may still claim up to $300 in cash contributions to nonprofit and charitable organizations. This deduction is available to all taxpayers that take the standard deduction on their 2020 return. This deduction is currently only available for 2020 contributions. To qualify, the donations must be in cash, not stock or donations of clothing or other property, and must be made directly to a qualifying organization.
Swords to Plowshares is a 501(c)(3) nonprofit organization. 100% of cash (credit card, check, and cash) donations made to Swords to Plowshares are tax-deductible. Our EIN is 94-2260626. Donations made to Swords to Plowshares must be post-marked or received by December 31, 2020 11:59 pm to be included in the 2020 tax year.
If you itemize your deductions:
You may deduct qualified charitable contributions up to 100% of your AGI.
Under Section 2205 of the CARES Act, contribution limits for individuals that itemize their deductions have been increased from 60% to 100% AGI for the 2020 tax year. That means that individuals may deduct qualified charitable contributions up to 100% of their Adjusted Gross Income (AGI) during 2020. Any contributions over the 100% AGI limit will be carried forward for five years. These changes apply to cash contributions (check, credit card, cash) made to qualifying charitable organizations. The 100% AGI limit does not apply to donations of stock.
If you are planning on leaving substantial gifts in your IRA, will or trust, there may be tax incentives for large charitable giving this tax year. Please consult your tax professional and/or financial advisor to determine your needs.
The tax information provided is general in nature. Rules and regulations regarding tax deductions may vary for individuals and joint filers. Please contact your financial advisor or tax expert for more information on how you can leverage your contributions this tax year.
Ways to Give: