While you frantically shop for the holidays and plan for a New Year’s celebration, remember that the deadline to play Santa to a charitable organization falls on December 31st. You can deduct donations during the calendar year 2020 on your federal taxes in 2021.
CARES Act Updates to Giving Deductions
If you itemize your taxes, you can deduct 100 percent of your adjusted gross income this year, an exception granted in the CARES Act that increases the deduction temporarily from its typical 60 percent. You can still benefit if you do not itemize since the CARES Act also created a $300 generic deduction. If you happen to donate more than 100 percent of your AGI, the percentage above 100 percent carries over to the following year’s taxes.
In a year where few have experienced wealth building, the Internal Revenue Service (IRS) and Congress have created a temporary measure to encourage giving. This also helps those who may have lost money this year in investments or had a reduced income to recoup some of the monies that would have been paid to the government by April 15, 2021.
Options for Donations
In these last few days of December, consider where your donation could do the most good. You do not have to donate money. You could also donate property or stock. In the case of stock donations, the gift continues to give to the charity since it obtains the current value of the stock as well as future dividends.
Regardless of the non-profit to which you donate, you have only a few days left to do so. You might also consider volunteering as AOG Wealth Management and their CEO Fred Baerenz does with one Kenyan medical facility and school. While you cannot deduct it on your taxes, the gift of your time makes a lasting difference.