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Immediate Tax Advantages For Donors
A financial incentive encourages Americans to give generously to qualifying charities, including United Way of Roanoke Valley. The new universal tax break for charitable donations was included in the final $2 trillion COVID-19 stimulus package signed into law in 2020, and the expanded provision continues for 2021.
The measure grants taxpayers an above-the-line deduction for up to $300 in charitable donations given in 2021. For example, if an individual takes the standard deduction and gives $300 to charity, they will get a $300 tax break in addition to the standard deduction. Married couples who file joint returns can deduct charitable gifts up to $600.
Please take advantage of this “above-the-line” opportunity and join United Way in funding programs that support the health, safety and well-being of the entire Roanoke Valley region. Here is the tax benefit break down for those taking standard deductions, itemized deductions and corporate giving:
For people who take the standard deduction, the CARES ACT allows you to take a tax deduction for contributions made to qualified charitable entities up to $300 per year starting in 2020 — this deduction is “above-the-line” for taxpayers who do not itemize their deductions. The 2020 Standard deduction is $12,400 for individuals and $24,800 for married couples filing jointly. Therefore, any donation to qualifying charities of up to $300 will be added to the standard rate of deduction. This deduction applies for 2021.
For people who file for itemized deductions, the CARES ACT allows you to take a tax deduction of up to 100% of your Adjusted Gross Income (AGI) for contributions to qualifying charities in 2021. The new law temporarily lifts the limits on charitable giving from 60% of a taxpayer’s AGI to 100% for 2021.
For corporate donors, the CARES ACT continues to allow an entity to take a tax deduction of up to 25% of their Adjusted Tax Income for contributions to qualifying charities in 2021. The new law temporarily lifts the limits from 10% of adjusted taxable income to 25% for 2020
Please note: this new deduction is for gifts that are made to a public charity, such as United Way, and not to a Donor Advised Fund.
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