Great news! There is a new financial incentive for Americans to give generously to qualifying charities, including Compass Affordable Housing. The new universal tax break for charitable donations was included in the final $2 trillion COVID-19 stimulus package and will go into effect starting with the 2020 tax year. The measure grants taxpayers an above-the-line deduction for up to $300 in charitable donations given in 2020. So, for folks who take the standard deduction, if you give $300 to charity, you should get the $300 tax break in addition to the standard deduction. Now is the perfect time to take advantage of this “above-the-line” opportunity and give to Compass Affordable Housing during the unprecedented COVID-19 health and economic crisis.
Here is the break down for those taking standard deductions, itemized deductions and corporate giving:
- Standard Deduction:
For people who take the standard deduction, the CARES ACT allows you to take a tax deduction for contributions up to $300 per year starting in 2020 – this deduction is “above-the-line.” The 2020 Standard deduction is $12,400 for individuals and $24,800 for married couples filing jointly, therefore any donation to qualifying charities of up to $300 will be added to the standard rate of deduction. This deduction is here for 2020 and beyond.
- Itemized Deduction:
For people who file for itemized deductions, the CARES ACT allows you to take a tax deduction of up to 100% of your Adjusted Gross Income (AGI) for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits on charitable giving from 60% of a taxpayer’s AGI to 100% for 2020.
- Corporate Donations:
For corporate donors, the CARES ACT allows an entity to take a tax deduction of up to 25% of their Adjusted Tax Income for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits from 10% of adjusted taxable income to 25% for 2020.