New 2020 Tax Benefits

Dear Friend of ROR-KC:

I hope this letter finds you well. My name is Eli Colmenero, and I sit on the Board of Reach Out and Reach-Kansas City and our Books on Tap event committee. During the (typical) work hours, I am a tax associate at a local business advisory firm and wanted to reach out regarding recent changes to the charitable giving landscape.

The role of philanthropy in responding to the current pandemic is critical. Recognizing the public’s increased demand for the services of nonprofits, Congress included special tax rules for charitable giving in The Coronavirus Aid, Relief, and Economic Security (CARES) Act. In sum, the CARES Act grants unprecedented tax benefits to donors who can give in higher amounts while realizing substantial tax savings.

The CARES Act added an above-the-line deduction for non-itemizing individuals of up to $300 or $600 for joint filers. This new deduction is generally allowable for charitable contributions paid in cash directly to qualifying organizations, like Reach Out and Read Kansas City. The provision is in addition to the standard deduction and may reduce adjusted gross income (“AGI”) that could impact the applicable tax rate and help donors realize significant tax savings.
Donors who intend to itemize in 2020 have now received the ability to utilize charitable giving to eliminate their entire 2020 Federal income tax liability. The CARES Act increased the maximum charitable deduction from 60% of AGI to 100% of AGI for tax year 2020. Generally speaking, these provisions only apply to cash gifts made during 2020, which makes the remainder of 2020 an ideal time to make that gift-of-a-lifetime.
Additionally, the maximum charitable deduction from corporate donors increased from 10% to 25% of AGI for cash gifts made during 2020. Thus, the incentives for the corporate community to partner with Reach Out and Read KC and have an immediate impact on the lives of children in the Kansas City area have never been better.

If you have any questions, I encourage you to reach out to your tax advisor and inquire as to how you or your business may best maximize this opportunity to achieve your giving goals. As we begin to move past this crisis, please consider Reach Out and Read Kansas City for your 2020 charitable giving.
Wishing you the best,
Eli Colmenero

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