Carrying on our tradition of providing you with Solutions Beyond the Obvious, we are pleased to bring you our “Ask the Experts” series of articles. In these articles, our Tronconi Segarra & Associates tax experts identify and explain the significant tax changes that were passed as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act which can provide additional relief for businesses and individuals facing economic hardship as the result of the coronavirus pandemic. Contact your Tronconi Segarra & Associates tax advisor for more information about any of the topics discussed in these articles.
Adam P. Ohar, CPA/ABV
Senior Manager
aohar@tsacpa.com
The recently passed CARES Act includes increased opportunities for charitable giving in an attempt to stimulate well-needed philanthropy throughout America during these trying times. Both individual and corporate taxpayers are afforded increased charitable deductions under this relief package.
Individual Taxpayers
For tax year 2020 only, taxpayers may elect to apply a new 100%-of-adjusted-gross-income (AGI) limit to cash gifts to public charities. Under the previous Tax Cuts and Jobs Act, a donor’s total deduction would be limited to 60% of AGI; but the new increase in threshold sets the stage for potential large charitable donations having the possibility of completely eliminating all of a taxpayer’s taxable income. The 100% AGI limit only applies to cash contributions and cannot be elected for donations of publicly traded securities or appreciated property. Furthermore, the cash contributions can only be donated to public charities; and gifts to a donor-advised fund or supporting organization will not be eligible for the increased limit. If donations are above a taxpayer’s AGI, the excess can be carried forward five years; but the following year will revert back to the 60% AGI limit regardless of when the donations were made.
Not an itemized deduction taxpayer? There is still good news! For 2020, non-itemized taxpayers are allowed a $300 ($600 for married couples) “above-the-line” adjustment to taxable income. Similar to the above guidelines, the deduction is allowable only on cash donations to public charities.
Corporate Taxpayers
The AGI limit has also been lifted for corporate donors for the tax year 2020. Corporations can now deduct up to 25% of taxable income (increased from 10%). As with donations by individuals, the increased limit only applies to cash donations to public charities. Gifts of publicity traded securities and appreciated property are not eligible for the AGI deduction limit as well as any donation to a donor-advised fund or supporting organization.
Please contact your Tronconi Segarra & Associates tax advisor for more information on this or any tax matter. If you do not have a Tronconi Segarra & Associates tax advisor, please call 716.633.1373 or Contact Us through our website with your question.
This article has been prepared for general guidance on matters of interest only; it does not constitute professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy of completeness of the information contained in this article; and, to the extent permitted by law, Tronconi Segarra & Associates LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this article or for any decision based on it.
