The 2020 CARES Act includes charitable tax provisions to encourage giving. These include:
• A new $300 ‘above-the-line’ tax deduction for taxpayers who do not itemize when filing their tax returns. This special $300 deduction applies to all individual and ‘married filing jointly’ tax returns.
• For individuals who itemize their deductions, the CARES Act increased the deduction for cash donations to charities to 100% of adjusted gross income for 2020. Individuals may deduct up to 100% of their gross income for cash donations to public charities (up from 60% in 2019). One caveat is that these donations apply only to qualified public charities, like Camp Pondo, and not donor-advised funds or private foundations.
• Corporations can now deduct up to 25 percent of taxable income (increased from 10 percent).
Although no tax law changes have been made to gifts of appreciated securities to charity, donating long-term, highly-appreciated taxable securities is one of the most tax-efficient ways to give (e.g. stocks, mutual funds, and exchange-traded funds that have realized significant appreciation over time).
• You receive a tax deduction for the full market value of the gift.
• You avoid capital gains taxes that may have applied to the future sale of the asset(s).
• You may donate appreciated assets up to 30% of 2020 adjusted gross income (AGI).
If you are 70½ or older, you are eligible to make a gift of up to $100,000 this year from your traditional IRA to help Camp Pondo. While you will not receive an income tax deduction, you will also not pay taxes on any distributions made to Camp Pondo. This qualified charitable distribution also counts toward fulfilling the annual required minimum distribution (RMD).
We are camp people, not tax people. This email should not be considered tax or legal advice. Please consult with your professional tax/legal advisor for information specific to your circumstances.