Doing Well By Doing Good, At Least In Miniature

As a result of recent amendments to the Internal Revenue Code, fewer taxpayers get a bang for bucks donated to charitable organizations.  Except …. Buried in the debris of frenzied responses to the scourge of COVID-19, a glimmer of light.  Whether or not you itemize, cash gifts of up to $300 (in the aggregate) to qualifying charitable organizations made before December 31, 2020, are deductible in determining your 2020 tax bill, period, end of thought.  No less an authority than the IRS has just sent out a reminder. (Do you suppose this means they have a beating heart?  Nah.)

The reduction in tax may not change your life, but from the point of view of many smaller charitable organizations, truly every little bit helps.  If you are stuck, I can suggest worthy recipients of your smallish but still important largesse.  Certainly everyone should try to scrape together $300 to take advantage of this (relatively) tax freebie.

For those one in ten of you who still itemize deductions, there is another tax saving opportunity.   Under the CARES Act there is a suspension of the normal rule that charitable contributions for the year may not exceed 60% of adjusted gross income.  For 2020 the limitation is 100% of AGI, with (as under prior law) a 5 year carryover for excess gifts.  As in the provision above, this higher limit only applies to cash gifts.  So, are you a potential donor who might be induced to jump at a larger cash gift this year, wipe out your tax liability and maybe have some carryover to boot?  If you otherwise have the disposable cash, it may just be a question of hating the IRS as much as (or more than) you love your favorite charity.

As in all things tax, it is important to get advice on your particular circumstances from your return preparer, CPA, or financial adviser.  Naturally, I can also be helpful.


Written by E. Morgan Maxwell

E. Morgan Maxwell

Since beginning his own firm, Mr. Maxwell has continued a tax-law oriented practice encompassing a wide range of transactions, planning and dispute resolution. His dispute resolution experience includes involvement at all levels of the Internal Revenue Service (Examinations, Appeals, Collections, Office of Professional Responsibility, the U.S. Tax Court), the Pennsylvania Department of Revenue, the Tax Litigation Section of the Pennsylvania Attorney General’s Office, Pennsylvania Commonwealth Court, Common Pleas Court and local taxing jurisdictions in southeastern Pennsylvania.

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