Better to Give Than to Receive (Article)
Better to Give Than to Receive
The holiday season is a great time for us to reflect on our blessings and finish strong with charitable donations, allowing us to give back to the causes we care about. 2020 has certainly been a crazy year for these organizations as they deal with decreased giving due to changes in the tax code and the COVID-19 pandemic.
For years, charitable contributions have been a win-win. Donors have an opportunity to give to the causes they care about and get a tax break from Uncle Sam in the process. Recall that charitable contributions can only be deducted from income if you itemize deductions.
Thanks to the tax code overhaul in 2018 fewer taxpayers are itemizing deductions since the standard deduction nearly doubled. In 2020, the standard deduction is $12,400 for single filers and $24,800 for married-filing-jointly. Now, nearly 9 in 10 taxpayers do not itemize their deductions. These folks may still be moved to contribute to their favorite charities, but the lack of a tax break might just dampen that desire.
This year, thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, individual taxpayers can claim a deduction of up to $300 for cash donations made to a charity during 2020 even if they don’t itemize. This “above the line” deduction lowers taxable income, translating into tax savings for those making donations to qualifying tax-exempt organizations. Congress clearly hoped to spur giving with this provision. Let’s hope it works.
Source: Internal Revenue Service. https://www.irs.gov/newsroom/special-300-tax-deduction-helps-most-people-give-to-charity-this-year-even-if-they-dont-itemize
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