Through the $2 trillion COVID-19 stimulus package known as the CARES Act, the Federal Government has just provided all taxpayers with a new financial incentive for Americans to give easily and generously to qualifying charities, including Earn to Learn. This universal tax break goes into effect starting with the 2020 tax year. For taxpayers, this is an above-the-line deduction for up to $300 in charitable donations made in 2020.
This means when you give $300, you get the $300 tax break in addition to the standard deduction. This is your special opportunity to give to qualifying charities who are working to improve the lives of Arizonans during this unprecedented COVID-19 health and economic crisis.
Here’s what you need to know how your gift to Earn to Learn will impact your taxes, whether you are taking the standard deduction, itemizing your deductions and/or participating in corporate giving:
1. Standard Deduction
The CARES Act allows those taking the standard deduction to take an additional “above-the-line” tax deduction for contributions made to qualified charitable entities up to $300 per year starting in 2020. The 2020 standard deduction is $12,400 for individuals and $24,800 for married couples filing jointly, so any donation to qualifying charities of up to $300 will be added to the standard rate of deduction. This deduction is here for 2020 and beyond.
2. Itemized Deductions
Under the CARES Act, those who file itemized deductions will be allowed to take a tax deduction of up to 100% of their Adjusted Gross Income (AGI) for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits on charitable giving from 60% of a taxpayer’s AGI to 100% for 2020.
3. Corporate Giving
For corporate donors, the CARES Act allows an entity to take a tax deduction of up to 25% of their Adjusted Tax Income for contributions to qualifying charities starting in 2020. The new law temporarily lifts the limits from 10% of adjusted taxable income to 25% for 2020.
We hope you find this information helpful. As always, we thank you for being such an important part of our Earn to Learn students’ success, and we sincerely look forward to brighter days ahead for us all.