By: Kevin S. Cooman
The CARES Act passed by Congress to address economic needs during the pandemic was massive, running 335 pages. Most of the public focus has been on the big economic incentives contained in the Act, like the Payroll Protection Program, designed to pump money directly into small businesses, and in turn, to their employees.
But tucked deep in Sections 2204 and 2205 were two provisions aimed at encouraging widespread charitable giving in 2020 (and future years) by individuals.
The first: All taxpayers may deduct up to $300 on their returns in 2020, even if they are taking the standard deduction. (As a result of the 2017 Tax Act changes, an estimated 85% of Americans take the now much higher standard deduction, rather than itemizing their deductions.) This section of the CARES Act was clearly designed to encourage those 85% of Americans to respond in at least some modest way to the pressing human needs created by the pandemic – for example, giving to local food banks, homeless shelter, hospitals and charitable clinics, and other traditional relief organizations like the Red Cross and the Salvation Army.
The second: For taxpayers of significant means, the cap on charitable deductions was removed. Big donors, previously limited to a charitable deduction of 60% of gross income, can give away up to 100% of their taxable income.
Our local not-for-profit organizations should do all they can to publicize these new giving opportunities. If even half of Monroe County’s 741,770 citizens gave $300 in 2020, the influx of donations to charities would be an astounding $111 Million.
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