- Donors who do not itemize may take a tax deduction for cash gifts of up to $300 per person, $600 per couple.
- This is an efficient way to give. For example, a couple in a 20% tax bracket can give $600 and reduce their tax liability by $120. The charitable organization receives $600 and the donor pays $120 less in taxes.
Increase of Cap on Charitable Gift Tax Deductions
- The cap on deductions for a charitable gift increased from 60% to 100% of adjusted gross income.
- This applies only to cash gifts.
- Gift amounts beyond 100% of a donor’s adjusted gross income can be applied up to five additional years.
- This provides an opportunity for additional tax savings for donors making large gifts. For example, if a donor makes a gift of $100,000 in one year and has an adjusted gross income of $100,000 for that year, there would not be any income tax liability. If the gift were $130,000, the donor could claim a deduction of $100,000 in the first year and claim a deduction for $30,000 in the following year.
Required Minimum Distribution (RMD) from IRAs Suspended for 2020
- Persons 72 years old and older with an IRA are not required to take a minimum distribution in 2020.
- This is significant because the amount of the RMD is based on the value of a person’s portfolio of stocks on December 31, 2019. With market uncertainty since that date, the required distribution would be significantly more than if based on current value. Not having to take a distribution in 2020 allows a retiree to leave their money in the market and hopefully see the value of their stock restored.