New Tax Incentives Encourage Giving When It Is Needed Most
Friday, November 20, 2020
The coronavirus has changed all our lives, and for many the financial impact of this year has been almost immeasurable. This was especially true for the children and families we serve in Nepal. We’ve been doing our best to meet the new and changing needs of our community, all while navigating fundraising in a world where there is no one who hasn’t felt the impact of the COVID-19 outbreak.
Fortunately for our supporters based in the United States, the federal government has added new tax rules to encourage those who have a little extra to help the causes they love. The new rules expand the benefits when you donate, providing a much-needed boost to non-profits everywhere. The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, creates giving incentives for taxpayers across the income scale, with the goal of addressing some of the challenges our communities are facing.
The Details:
- Individuals who do not itemize their taxes will be able to deduct charitable contributions for the first time in 40 years. This deduction is limited to $300 for individual taxpayers and $600 for households filing jointly. Nearly 80 percent of taxpayers take the standard deduction, so this new incentive is available to an enormous number of potential donors.
- Individuals who itemize deductions and seek to deduct as much as possible from their adjusted gross income (AGI) can now deduct up to 100% of their AGI. In past years, donors could only deduct 60 percent of their AGI through cash contributions to public charities; for 2020, that limit was raised to 100 percent.
- Donating long-term appreciated securities or distributions from an IRA remain popular and effective options for reducing one’s overall tax burden while creating new philanthropy, though the rules associated with such gifts were not materially changed by the CARES Act. Donors who have realized significant capital gains, whether through stock, bonds, or real estate, are still subject to deduction limitations and should consult their financial and tax advisors.
The new tax rules included in the CARES Act could not have come at a more critical time for organizations around the world, including BlinkNow, and we hope these new incentives will allow our family of supporters to continue to robustly fund the life-changing work we’re doing in Nepal.
The information contained in this site is provided for informational purposes only, and should not be construed as legal or financial advice. We encourage you to contact your preferred legal or tax professional to learn how this information will impact you specifically.
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