In my time of working with people who donate to make the world a better place, I have never met someone who donates simply to save money on taxes. And, I have worked with many donors who are able to be more philanthropic because their tax bill is less due to their giving.
For those new to my blog, remember that I am not a financial consultant, I’m a nonprofit fundraising consultant. Be sure to speak with your family’s financial or wealth manager! A simple email asking how the CARES Act might positively affect your giving this year would be a good start.
Regardless of how much you will donate this year, or if you itemize or not, here are are few items that could support your tax savings and perhaps allow you to donate more (and be more impactful with your giving) based on the CARES Act that was signed into law this past spring.
As most people no longer itemize, I’ll start there. You can now deduct up to $300.00 in cash donations, meaning if you donate $300.00 this year you can take an “above the line” deduction for that same amount. This is an increase from $0.00.
For those who do itemize, there are reasons to donate more if you’re in the position to do so. First, let’s look at your AGI, your adjusted gross income. Before CARES Act you could deduct up to 60% for cash contributions of your AGI and now that number is 100%. If you are considering a bigger donation this year, this change could benefit you.
If you’re between the ages of 59 1/2 and 70 1/2 this increase in deduction from 60% of your AGI to 100% could also benefit you because due to the increase a donation from someone who typically would not have to make a qualified charitable distribution because they’re not yet 70 1/2 could get the same tax relief as if they were. You make a charitable donation from your IRA and the tax owed could be offset due to the increase of deduction for your AGI.
It’s a lot to consider, and remember I am not a wealth manager. Speak with your person.
Regardless of how much you want to donate this year, the CARES Act means you can get some tax relief for the donation. If you’re in a position to give, speak with your financial person or accountant.
Thank you for reading. Remember that I work with many nonprofits so if you need an idea for a nonprofit that is changing the world to donate to let me know! My email is firstname.lastname@example.org