Charitable Giving: Tip #1
by Kathy Sherby,
Diocesan Investment Trust member
November 16 – 20 is National Philanthropic Week. This is the time to think about giving to your favorite charity, particularly if that charity is your church.
Prior to 2020, taxpayers could only take their charitable gifts as deductions on their tax returns if they itemize their deductions. However, with the 2017 Tax Act, the standard deduction was increased significantly to $12,500 for a single person and $24,000 for a married couple. As a result, only about 11% of taxpayers now actually itemize their deductions. Congress took this into consideration when it recently enacted the CARES Act. In order to encourage charitable giving in 2020, the CARES Act authorizes taxpayers who don’t itemize deductions to take a deduction of up to $300 for cash contributions to charity.
In addition, for taxpayers who do itemize deductions, the CARES Act temporarily suspends for 2020 the limitation on charitable contribution deductions. Prior to the CARES Act, a taxpayer could deduct up to 60% of their adjusted gross income for cash contributions to public charities. The CARES Act lifted this limitation so that in 2020 a taxpayer can deduct charitable contributions equal to 100% of their adjusted gross income. Thus, for those very generous souls, you can offset entirely your adjusted gross income with your cash contributions to your church this year. Next year the limitation returns, and you will only be able to deduct up to 60% of your adjusted gross income for cash contributions to your church.
Kathy Sherby is Senior Counsel, member of the Private Client Group of Bryan Cave Leighton Paisner, Past President of the American College of Trust and Estate Council, and nationally recognized speaker on estate planning issues. She is a member of the Church of St. Michael and St. George in Clayton.
Everyone's financial situations are unique. Please consult your personal financial advisor for more information.