There is a new financial incentive for Americans to give generously to qualifying charities, including Habitat for Humanity Tucson. The new universal tax break for charitable donations is now in effect for the 2020 tax year. The measure grants all federal taxpayers an above-the-line deduction for up to $300 in charitable donations given by December 31, 2020.A gift of that size to Habitat Tucson could cover the cost a front door or faucet. Every gift means the world to the families in need of a safe and stable place to call home. Every gift helps build hope.
On March 27th the CARES Act was published into law (Public Law 116-136, HR 748), the largest fiscal relief measure in US history. This $2.3 trillion package included two incentives aimed specifically at increasing charitable giving
The first provision made the Universal Charitable Deduction part of the law and available to all households that do not itemize their donations.
The Universal Charitable Deduction permits all individuals who do not itemize their taxes to deduct contributions to most charities. There is a cap of $300 per filing/household. The deduction is for cash only. It does not include stocks or other non-cash assets. It also does not apply to contributions to Donor Advised Funds (DAFs) or carryover contributions.There is currently no sunset date on this provision. Habitat Tucson and other charities hope that this law will remain in effect or even increase in years to come.
A second provision modified limitations on charitable contributions for those who itemize their donations. These incentives are available to individuals during the 2020 tax year.
In the second provision, the CARES Act completely suspends the limitation on deductions for individuals who itemize their donations. The deduction is for cash only. It does not include stocks or other non-cash assets. It also does not apply to contributions to Donor Advised Funds (DAFs). For taxpayers in this bracket, excess contributions may be carried over for the next five years.
HR748 also waives the Required Minimum Distribution (RMD) for 2020. However, donors may still make Qualified Charitable Distributions (QCDs) from their retirement accounts. Generally, a QCD is an otherwise taxable distribution from an IRA owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity.
For questions about this information please consult your tax advisor or financial planner.
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