HCT Members & Friends:
The COVID 19 Stimulus Package, also known as the CARES Act contained language that impacts the way your charitable contributions to the organizations you care about are rewarded by the IRS.
To highlight a few of these changes:
The adjusted gross income (AGI) limit for cash donations was increased for individuals. In 2020, cash contributions may be deducted up to 100 percent of your AGI (increased from 60 percent).
If you’re between 59½ years old and 70½ years old, benefits similar to a QCD (Qualified Charitable Distribution) are now available; you can take a cash distribution from your IRA, contribute the cash to charity, and this may completely offset tax attributable to the distribution by taking a charitable deduction in an amount up to 100 percent of their AGI for the tax year.
If you are over 70.5 years, you might also consider the tax benefit of making a donation directly from an IRA or 401(k) account. The IRS allows these direct donations to be tax-free withdrawals from the account. In addition, you can take a deduction up to $300 (if you do not itemize) and up to $100,000 (if you itemize) subject to certain income limits. By using the retirement assets, one gets a double benefit, avoidance of ordinary income tax on the withdrawal, and a tax deduction up to the applicable limits. If it’s not retirement assets, you are donating with post-tax earned dollars.
(Please note this information is not intended as legal or tax advice. Please consult your legal or tax advisor for application to your own situation.)
For further information, please see: