The CARES Act has made giving easier with expanded incentives for non-profits. New donor-centered tax benefits and impactful ways to support YOUR theatre company are here.
HOW HAVE DEDUCTIONS CHANGED?
There are new Deductions: Up to $300 per taxpayer ($600 for married couples) in charitable contributions. This is available only to people who take the standard deduction (for taxpayers who do not itemize their deductions). It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI), and thereby reduce taxable income. It is calculated by subtracting the amount of the donation from your gross income.
*A donation to a donor advised fund (DAF) does not qualify for this new deduction.
HOW ABOUT LIMITS TO MY DEDUCTION?
There are new Charitable Deduction Limits: As part of the bill, individuals and corporations that itemize can deduct much greater amounts of their contributions. Individuals can elect to deduct donations up to 100% of their 2020 AGI (up from 60% previously). Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%. Plus, the most exciting news is that this new deduction is for cash gifts that go to a public charity, such as Arizona Theatre Company. The old deduction rules apply to gifts to private foundations only. If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.
*These new limits do not apply to gifts of appreciated stock or donations directly to a DAF.
WHAT ABOUT THE REQUIRED MINIMUM DISTRIBUTIONS?
Required Min. Distributions have been waived and extended in 2020 for most donors: Required minimum distributions (RMD) that would normally start in 2020 do not have to start until 2021, including distributions from defined benefit pension plans and 457 plans. This change will dampen somewhat the incentive for a donor to make a qualified charitable distribution (QCD) from their IRA in 2020.
The Takeaway – donors directing a QCD to a charity this year (up to $100,000 per individual) will still reduce their taxable IRA balance. This allows taxpayers, itemizers, and non-itemizers alike to direct gifts from their IRA to charities in a tax efficient manner.
WHY DO TAX INCENTIVES MATTER AND HOW DOES THIS HELP ARIZONA THEATRE COMPANY?
The inclusion of expanded charitable giving incentives is a critical acknowledgement by Congress that the work of nonprofit arts organizations like Arizona Theatre Company are essential services. A cultural beacon for the community.
For more information, please contact our Development team at firstname.lastname@example.org.
This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.