Cares Act Impacts for 2020
Hello, friends. We want to inform you about some giving and donation impacts that are coming from the newly resolved Cares Act.
Universal Charitable Deduction
A new deduction is available for 2020. A few years ago (2017), charitable deductions changed for taxpayers. The increased “standard deduction” meant that many donors no longer benefited from itemizing charitable giving. This new deduction allows for all taxpayers to deduct for charitable giving and have impact on the “top” and “bottom” of one’s tax responsibility.
For taxpayers who do not itemize their deductions, there is an “above-the-line” adjustment to income that will reduce a donor’s Adjusted Gross Income (AGI) and consequently taxable income. The adjustment is available for cash gifts up to $300 per taxpayer or $600 for a married couple filing jointly.
More about the universal charitable deduction can be read in this Forbes article.
We know that in the current crisis there are lots of people and organizations in need. Our team at Soccer Chaplains United falls into that category, as well. Just because the lights are currently out on the pitches across the world, doesn’t mean that Soccer Chaplains United isn’t hard at work. Our chaplains and counselors are perhaps busier than ever, finding ways to use the sport of soccer to bring people closer to Christ.Matthew Adams, Soccer Chaplains United Board Member
New 100% AGI Limit
For 2020, and as part of the Cares Act, there is a different benefit for the taxpayer that itemizes deductions. Phil Purcell, Senior Counsel for Philanthropy, on behalf of the Fellowship of Catholic University Students, writing for the IUPUI’s Fund Raising School, writes:
A 100 percent AGI limit is available only in 2020 for cash gifts to public charities by those who itemize. The 100 percent limit is reduced dollar-for-dollar by other itemized charitable deductions. This means that in 2020, a donor who deducts 30 percent of AGI for gifts of long-term appreciated property and elects the 100 percent of AGI limit for qualified cash contributions will be able to also deduct up to 70 percent of her AGI for qualified cash gifts, a total deduction of up to 100 percent of AGI. A donor who makes the 100 percent of AGI election can carry over unused deductions up to five additional years. The carry-over deduction will be subject to the regular 60 percent of AGI limit. However, because federal income tax rates are progressive, it may not always be to a donor’s advantage to make the 100 percent of AGI election.Phil Purcell, Senior Counsel for Philanthropy
Suspension of Required Minimum Distribution (RMD)
Another change that will impact a number of donors and partners for Soccer Chaplains United is the suspension of the RMD. QCD-RMD’s (Qualified Charitable Donations – Required Minimum Distributions) are ways for retirees of a particular age to reduce their tax burden on the amounts that must be taken out of a qualified IRA.
Earlier this year, before COVID-19, the minimum age changed for QCD-RMD from 70 1/2 years to 72 1/2. Within the change brought on by the Cares Act, there is a decrease in the tax incentive for a donor to make a qualified charitable distribution from an IRA in 2020. Again, Phil Purcell explains it best,
…the change will help retirees who would have had to withdraw a greater percentage of their retirement accounts than expected or face a penalty, given that their RMD calculation for 2020 is based on the retirement account balance as of Dec. 31, 2019 and account values decline with the market.Phil Purcell, Senior Counsel for Philanthropy
There are other changes in the tax laws for 2020 that will impact taxpayers and charitable giving. Donors are encouraged to explore and understand the different benefits, advantages, and disadvantages. Neither this post, nor the Forbes article, should be considered “tax-advice.” You are encouraged to ask a qualified tax-preparer for more information. Soccer Chaplains United is a 501(c)3 charity and gifts and donations are tax-deductible.
You can give a safe, secure, electronic gift via PushPay by clicking the button below or by texting soccerchaplains to 77977. You can also mail a donation to Soccer Chaplains United, PO Box 102081, Denver, CO 80250.