As stimulus checks start going out and new tax law is in place, we have received a few questions on how this affects your charitable giving in 2020. With the help of The Paros Foundation friend and donor, Eric Nikssarian, CFP® a wealth advisor with EP Wealth Advisors, we were able to understand some of these changes.
- One of the rules that can directly affect your charitable giving is that you can now donate up to $300 ($600 for joint filers) to The Paros Foundation or any bona fide 501(c)3 organization and deduct it above-the-line on your tax return in 2020 directly lowering your taxable income. This new rule is available for taxpayers who do not itemize deductions in 2020. *Please note this rule change is only in effect for 2020 and donations to a Donor Advised Fund do not count for this deduction.
- For those that are itemizing, charitable deduction limits have increased from 60% of adjusted gross income to 100% of adjusted gross income for 2020 only. Charitable deduction limits for corporations have also increased to 25% of their taxable income, up from 10% for 2020 only. *Please note donations made to Donor Advised Funds again do not count for this incentive. Be advised if you plan to donate property, securities, and other non-cash assets that they may not qualify.
- Lastly, required minimum distributions have been waived for 2020 in most cases. However, individuals who want to donate from their IRA can still make qualified charitable distributions to 501(c)3 organizations, even though there is no incentive to do so.
The silver lining to these trying times is that we can still make a positive impact. If you have any questions about donations feel free to direct your questions to Peter Abajian, Executive Director of The Paros Foundation. If you’d like to contact Paros friend Eric Nikssarian, CFP®, a Wealth Advisor at EP Wealth Advisors, you can email him at email@example.com.