There is still time to get some tax benefits from charitable donations, and there are still some opportunities for charitable giving.
Any qualified charity that is in sync with your values would be happy to have more money to support its beneficiaries any time you’re able to give support. But 2020 has some specific tax benefits made available through the CARES Act, so it might be worth your while to give some monetary support in time to have it apply this year. One of the CARES benefits is for taxpayers who don’t itemize their deductions. For these folks, there’s generally not a federal tax benefit for checks written to charities. But during 2020, up to $300 of charitable donations can be deducted on a federal return, even if the tax return doesn’t take itemized deductions.
Another provision of the CARES Act for charitable donations is increasing the amount that can be deducted. Generally, the amount that’s eligible as an itemized deduction is limited to a portion of income. This year, there is a potential to donate 100% of income and deduct the entire amount. If you have savings you can use for your living expenses, you could donate your income and receive a greatly enhanced charitable tax break this year.
Even before the pandemic, child care has been a problem for many working families. Schools moving to remote learning have made that an even bigger problem. And the health safety requirements that need to be practiced in child care facilities has been a strain on them.
Add potential for having to limit capacity and temporarily close due to a child or staff member testing positive for COVID, and the pressure on working parents and their day care organizations increases. Donations to qualifying child care providers in Colorado made by Colorado taxpayers may qualify for a state tax credit. The donation must be used to provide specific services and there are some limitations on the receiving organizations. Leslie Sabin, vice president of finance and operations for the Pikes Peak Community Foundation, points out that donations by cash or check might be eligible to receive a Colorado tax credit of 50% of the amount donated. “Utilizing the child care tax credit is a fantastic opportunity to provide necessary services and support to families in our community while also receiving both a charitable deduction and a tax credit,” she said.
The details of requirements can be found at colorado.gov/pacific/sites/default/files/ Income35.pdf.
With less than two weeks left in 2020 and federal holidays and weekends between now and Dec. 31, you might want to hand deliver your donations or use a guaranteed delivery method. For those who have not been negatively impacted by the pandemic, there are still opportunities to help those who have — and have tax benefits in return for your willingness to help. If you would like some ideas or direction, the Pikes Peak Community Foundation at 719-389-1251 is happy to help.
Linda Leitz is a certified financial planner. She can be reached at firstname.lastname@example.org.