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Tag Archives: Charitable Giving

Congress Makes Charitable Giving Easier During the COVID-19 Crisis

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on April 16, 2020 by Lake Wylie Tax Services StaffFebruary 18, 2021

Charitable-Giving-Easier-During-the-COVID-19-CrisisTo encourage charitable contributions to deserving qualified charities during these trying times, Congress has relaxed some of its restrictions related to how much a taxpayer can deduct as a charitable contribution in any given year.

Under normal circumstances, cash contributions are limited to 60% of a taxpayer’s adjusted gross income (AGI). However, as has happened in the aftermath of prior disasters such as 2017 hurricanes Harvey, Irma and Maria, the CARES Act has increased the AGI limit to 100% for 2020. Any amount in excess of 100% can be carried over and deducted on subsequent years’ returns until the excess is used up or until five years have passed, whichever happens first.

The CARES Act also created an above-the-line charitable contribution for taxpayers who don’t itemize their deductions. This will allow for a charitable deduction for cash contributions to qualified charities of up to $300 made in 2020.

While generally, the increased charitable contribution limitations related to natural disasters have applied only to contributions to relief efforts specific to the disaster, the only requirement for the CARES Act provisions is that the donations be in cash.

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Posted in COVID-19 | Tagged Charitable Giving

New Twist Added to the IRA-to-Charity Provision

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on February 18, 2020 by Lake Wylie Tax Services StaffFebruary 18, 2020

IRA to Charity Rules ChangeEver since 2006, individuals age 70½ or older have been able to transfer up to $100,000 annually from their IRAs to qualified charities. These transfers are referred to as qualified charitable distributions (QCDs), and here is how this provision, if utilized, plays out on a tax return:

(1) The IRA distribution is excluded from income;
(2) The distribution counts toward the taxpayer’s required minimum distribution (RMD) for the year; and
(3) The distribution does NOT count as a charitable contribution.

At first glance, this may not appear to provide a tax benefit. However, by excluding the distribution, a taxpayer with itemized deductions lowers his or her adjusted gross income (AGI), which helps with other tax breaks (or punishments) that are pegged at AGI levels, such as for medical expenses, passive losses, and taxable Social Security income. In addition, non-itemizers essentially receive the benefit of a charitable contribution to offset the IRA distribution.

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Posted in Retirement, Retirement Planning | Tagged Charitable Giving

Legitimate Tax-Deductible Charity or Scam?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on November 21, 2018 by Lake Wylie Tax Services StaffFebruary 18, 2021

Holiday Charity TipsWith the holiday season approaching, and with the great need for aid in the wake of the recent hurricanes and wildfires, you no doubt are being solicited for donations. However, do not be fooled by the scammers who come out from hiding whenever there is a disaster and during the holiday season. The last thing you want to do is get ripped off; not only will your charitable dollars go to waste, but you will also lose your tax deduction, as contributions are only tax-deductible if they are to qualified charities.

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Posted in Tax Central, Tax Deductions | Tagged Charitable Giving, Charity
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