Information on the CARES Act and how you can take advantage of some special tax incentives if you act by December 31, 2020.

If you claim the standard deduction on your income taxes (you don’t itemize your deductions), you can now claim an additional $300 deduction on your 2020 tax return if you give that much or more to charity. That means if you’re like most Americans who don’t itemize, you can still give an additional $300 to charity and reduce your adjusted gross income (AGI) by even more.
If you itemize your deductions on your tax return, you can now deduct 100 percent of your AGI if you give that amount or more to charity. This was formerly capped at 60 percent of AGI. Any giving beyond this 100% limitation may be carried over and used in the next five years (at the previous 60 percent cap). This means that folks in a position to give generously can reduce their income taxes more than ever, while supporting the charities they love more as well.
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Note that this higher 100 percent cap applies only to cash contributions made directly to charitable organizations such as the Blue Ridge Land Conservancy and not to contributions to donor advised funds, supporting organizations or private foundations.

Some examples:

If you don’t itemize your deductions:
Mr. and Mrs. Jones together make $100,000 per year as teachers. They make numerous charitable gifts each year, but their generosity totals less than the standard deduction. So on their taxes, they claim the standard deduction of $24,800 for a married couple filing jointly. This year, however, Mr. and Mrs. Jones can claim another $300 deduction above and beyond their standard deduction by making an additional $300 charitable gift. This reduces their taxable income—the amount they pay Uncle Sam taxes on—by an additional $300.

If you itemize your deductions:
Ms. Smith, a small business owner, has $300,000 of AGI for 2020. She has in mind making a $500,000 charitable contribution this year for a special cause near to her heart. Most years, her income tax deduction would be limited to $180,000 (60 percent of her AGI). For this year only, the CARES Act allows a charitable contribution deduction of 100 percent of her AGI, or the full $300,000. And, Ms. Smith can carry forward the remainder of her deduction ($200,000), deducting 60 percent of her AGI each year for up to five years or until her deduction is used up.

But remember, you have to act by  December 31 to take advantage of these special incentives!


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