Living generously is an important part of the Christian life, and giving is an important expression of worship. Your financial support is needed and appreciated. Your gifts are used to express God’s love in many practical ways. Note the information below on the 2020 CARES ACT suspension of charitable deduction limits.
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2020 CARES ACT
2020 has brought many changes and the CARES Act has been one that has changed some things as we approach the end of the year. These are just a few items that have changed in The CARES Act for giving this year:
Charitable Giving Deduction for taxpayers that itemize
Part of the CARES Act that was passed for coronavirus relief created a new charitable deduction for donors who chose the standard deduction versus itemizing. Donors who take the standard deduction can deduct up to $300 in charitable giving for the 2020 tax year. This deduction will appear on the tax returns for 2020 above the line for calculating adjusted gross income (AGI).
Suspension of charitable deduction limits
For donors who itemize their deductions, the amount they can deduct for charitable giving was limited to 60% of adjusted gross income (AGI). For 2020, the AGI limit has been eliminated for cash donations.
Required Minimum Distributions (RMD) from Traditional (non-Roth) IRAs and 401k accounts
The CARES Act suspended the RMD that taxpayers with traditional IRA and 401k accounts. RMDs are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that the account owner turns 72 (70 ½ if you reach 70 ½ before January 1, 2020). But, keep in mind, the most impactful and tax-efficient way to give if you have an IRA remains intact. This is called Qualified Charitable Distribution (QCD). The account owner can still make a charitable transfer of up to $100,000 from a traditional IRA or 401k account. The amount transferred would not be subject to federal income tax and in some cases, state income tax. The transfer must be made directly for the IRA or 401k account to Cedarbrook.