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Deduction Limits Increased for Cash Gifts
If you made a large cash gift in 2019, you could deduct it only to the extent of 60% of your adjusted gross income. This year, the CARES Act allows you to deduct it to the extent of your entire adjusted gross income. NOTE: This does not apply to deductions generated by gifts of appreciated property, like stocks or real estate.
Example: Suppose you had income of $300,000 in 2019, but from cash investments you made a cash gift of $500,000. Your previous deduction limit would have been $180,000 (60% of $300,000). However, in 2020, you can deduct $300,000. In both cases, the unused amount of the deduction could be carried forward and used to the extent of the limitation applicable to the carryover year.
Planning Pointer 1: Like the $300 deduction for non-itemizers, the modification of the contribution limit does not apply in the case of gifts for donor-advised funds and supporting organizations. The gifts in most cases must be to public charities like ours.
Planning Pointer 2: In the event you have made a multi-year pledge to a charity, you might want to accelerate payment of the pledge balance in 2020 if you can afford to do so. The charity would have the use of the money sooner - and you could use the deduction more quickly. |
