News and Commentary

Charitable Giving Can Yield Greater Tax Benefits in 2020 Thanks To The CARES Act by Lee F. Hediger

The CARES Act offers individuals and businesses greater incentives to maintain or increase charitable giving in 2020, even when they may be facing their own personal struggles to survive the financial impact of the COVID-19 health crisis.

For Individuals

Effective for 2020, individuals who itemize deductions on their federal income tax returns may write off the full amount of any cash contributions they make during the year to qualifying nonprofits, including publicly funded charities and certain foundations but excluding private foundations or donor-advised funds. In fact, you may choose to donate all your adjusted gross income (AGI) for 2020 to a charitable organization and avoid paying federal taxes on that income. Ordinarily, the deduction would be limited to 60 percent of the taxpayer’s AGI.

If you do not itemize and instead claim the standard deduction, you may be able to deduct from your taxable income up to $300 for cash contributions you make to qualifying nonprofits during the year.

The CARES Act also makes it more tax-efficient for retirees age 70½ or older to increase their philanthropy this year by allowing them to defer required minimum distributions (RMDs) from their retirement account and eliminate their exposure to income tax on withdrawn amounts. Moreover, retirees may take advantage of existing tax law and reduce the size of their taxable estates by transferring up to $100,000 from their retirement accounts directly to qualifying nonprofits via qualified charitable contributions (QCDs).

For Businesses

The CARES Act also provides a boost to corporate giving in 2020 by increasing the deduction C corporations may receive for charitable contributions of cash to 25 percent of the business’s taxable income, up from 10 percent. For all other business entities whose company income passes through to its owners, the increased individual charitable deduction of up to 100 percent of AGI will apply.

Charitable giving has always played a critical role in estate planning, providing families with opportunities to maximize tax-efficiency and create a legacy of philanthropy for the greater community good. During these very challenging times, families may consider working with their professional financial advisors to accelerate their giving strategies and ensure essential services continue to reach those in need.

About the Author: Lee F. Hediger is a co-founding director and chief compliance officer with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with Raymond James Financial Services. For more information, call (954) 712-8888 or email info@provwealth.com.

 Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Lee F. Hediger is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

 Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs. PWA is not a registered broker/deal and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.

The information contained in this report does not claim to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investments mentioned may not be suitable for all investors.

 


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