The CARES Act allows you to avoid paying income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
The CARES Act expands your ability to take a tax deduction for your charitable contributions. Although you typically cannot take a charitable deduction if you don’t itemize your deductions, now you will be able to deduct up to $300 of contributions to certain charities. And, if you do itemize, you may be able to make gifts to charities up to your total adjusted gross income and deduct those gifts fully in 2020.
For contributions of cash paid to charitable organizations in calendar year 2020 only, individual taxpayers who itemize are allowed to elect to claim a charitable income tax deduction up to 100% of adjusted gross income (AGI), computed without any net operating loss carryback to the taxable year.
Also, if you have a taxable estate or are building substantial wealth, the current environment provides a unique opportunity to save tremendous amounts of estate tax. But to take advantage of the current exemption and valuation discounts, you need to act before this perfect storm passes.
Now is the time to consider your planning strategies and valuation discounts.
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