Don’t Forget How Generous You Were Last Year and Miss Out on 2020 IRS Charitable Deductions

Charitable Giving

April 15, Tax Day in the U.S., is just around the bend. So, I thought you might need a reminder about how The Coronavirus Aid, Relief, and Economic Security (CARES) Act changed the charitable deduction rules. Don’t worry! You’ll probably like these changes.

 

Changes for 2020 charitable deduction rules that won’t last forever

The CARES Act changed charitable deductions in 2020, anticipating a decline in revenues for philanthropic organizations. After a drop in giving April through June, Americans increased their generosity last year by 2% during the sharpest economic downturn since World War II. The changes to charitable deduction rules apply to 2020 but could stick around. The changes may impact you individually and your business in 2020 and 2021.

Here are the highlights of the charitable deduction changes.

Get your downloadable infographic here.

Ask your tax advisor how these charitable deduction changes impact you and your business. Also, check out indinero’s tax resources for startups and small business owners.

 

Did charitable giving fall off a cliff in 2020? Quite the opposite.

In response to the global coronavirus pandemic last year, not-for-profit corporations like our client, The Town Kitchen, continued to serve their constituents. The Town Kitchen provides the Bay area with locally sourced food and beverages and trains underserved youth. Likewise, large corporations and smaller distilleries pivoted to provide goods like personal protective equipment and hand sanitizer to healthcare workers.

According to Blackbaud, the third sector brought in $40.7 billion in 2020. Notably, online giving jumped 21%, and 30% of online donations were made from mobile devices. What’s more, the average online gift size of $177 was $29 higher than online gifts in 2019.

This Pot of Gold post was inspired by ɸιλανθρωπία (Ancient Greek for philanthrōpía); the meaning of philanthropy is rooted in humanity, kindliness, and benevolence.

Small businesses are powered by generous, creative, and caring people. indinero has helped companies just like yours to reach their social and financial goals. Schedule a call with one of our experts.

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Quick Note: This article is provided for informational purposes only, and is not legal, financial, accounting, or tax advice. You should consult appropriate professionals for advice on your specific situation. indinero assumes no liability for actions taken in reliance upon the information contained herein.

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Summary

The CARES Act introduced temporary changes to charitable giving rules for 2020, allowing individuals to deduct up to $300 in donations even if they take the standard deduction, and raising the corporate deduction limit to 25% of taxable income. Despite the pandemic, charitable giving increased by 2% in 2020, with online donations rising 21% and the average online gift reaching $177. These changes were designed to support nonprofits during the economic downturn and may continue into 2021.

Key Facts

Frequently Asked Questions

What were the CARES Act changes to charitable giving rules in 2020?

The CARES Act changed charitable deduction rules in 2020 by allowing individuals who take the standard deduction to claim a charitable deduction of up to $300, and increasing the deduction limit for corporate donations to 25% of taxable income. These changes were designed to encourage charitable giving during the pandemic.

Did charitable giving fall off a cliff in 2020?

No, charitable giving did not fall off a cliff in 2020. According to Blackbaud, the third sector brought in $40.7 billion in 2020. Online giving jumped 21%, and 30% of online donations were made from mobile devices. The average online gift size was $177, which was $29 higher than in 2019.

How did the CARES Act impact charitable deductions for individuals and businesses?

The CARES Act allowed individuals to deduct up to $300 in charitable contributions even if they take the standard deduction. For businesses, the deduction limit for charitable contributions was increased to 25% of taxable income, up from 10%. These changes applied to the 2020 tax year and may continue into 2021.

What is the deadline for 2020 charitable deductions?

The deadline for 2020 charitable deductions is April 15, 2021, which is Tax Day in the U.S. You can make contributions by that date and still claim them on your 2020 tax return.

Related Entities

People
Josh Melick
Companies
Indinero, Blackbaud, The Town Kitchen
Locations
Bay Area, U.S.