Palm Beach Florida Weekly

DONATE & GET BACK

A little-known part of the coronavirus CARES Act gives most taxpayers a break for charitable donations — but you only have until Dec. 31



 

IF YOU’RE ONE OF THE NINE OF 10 TAXPAYERS WHO TAKES THE STANDARD deduction when filing your taxes, we have a hot tax savings tip for you, but you’ll need to move fast because you only have until Dec. 31 to qualify for it. What’s nice is that you’ll get to help others while having the chance to bring down your taxes because it’s a special 2020-only deduction for making charitable donations.

“Charitable giving is always in style, but this year more than ever, because of coronavirus, there are people who just don’t have jobs to go back to,” said Lou

Fuoco, CPA, the CEO and managing director of The Fuoco

Group, a certified public accounting and business advisory firm in North

Palm Beach. “But if someone was working remotely or has that stimulus check from the government in a savings account, I think people do have a pocket to reach into and this tax deduction just helps to push them over the edge.”

As a little-known part of the coronavirus CARES Act that passed in March, Congress approved a special above-the-line tax deduction that directly reduces your adjusted gross income when you give to nonprofits.

The Southwest Florida Symphony Orchestra resumed performances with the Holiday TinyPops concerts held at outdoor locations such as this one in front of the Sidney & Berne Davis Art Center in downtown Fort Myers. PHOTO BY KARA GRIFFITH / COURTESY OF SOUTHWEST FLORIDA SYMPHONY ORCHESTRA

The Southwest Florida Symphony Orchestra resumed performances with the Holiday TinyPops concerts held at outdoor locations such as this one in front of the Sidney & Berne Davis Art Center in downtown Fort Myers. PHOTO BY KARA GRIFFITH / COURTESY OF SOUTHWEST FLORIDA SYMPHONY ORCHESTRA

“Assuming you’re in the 24% tax bracket (around $85,000 annual income) and you make a donation of $300, in essence it only cost you about $225 because the government-subsidized roughly $75 of that contribution,” said Chuck Knox, principal with CPA firm CliftonLarsonAllen in Fort Myers, which provides wealth advisory, outsourcing, audit, tax and consulting services.

If you are a taxpayer who takes the standard deduction, this special 2020 deduction allows you to deduct up to a total of $300 of qualifying charitable donations.

“A donation of $300 is in the realm of reality for a lot of people,” Mr. Fuoco said. “You don’t have to be wealthy to give $100 to three charities or give one charity a $300 donation.”

For this particular special deduction, the recipient of the charitable donation does have to fit the Internal Revenue Service’s definition of a qualified charitable organization. This rules out private foundations and donor-advised funds. The IRS does provide a Tax Exempt Organization Search function on its website so you can check to see if a donation to a particular nonprofit qualifies for the deduction. The search is also handy for verifying the legitimacy of any organization soliciting for donations.

FUOCO

FUOCO

To qualify for the special deduction, the donation does have to be monetary, whether made by cash, check, debit or credit card, so responding to those appeals to donate your rusting jalopy that has broken down in the driveway doesn’t qualify for this specific tax deduction. While you have only about a week left to squeeze in those donations, it literally could pay to check through your old receipts because the deduction applies to any qualifying donations you made for the whole year, even from before when the CARES Act was drafted.

KNOX

KNOX

If you are a taxpayer who does itemize deductions, Congress also included an incentive to encourage you to make additional charitable contributions. A provision of the CARES Act raised the limit of the amount of charitable contributions that you may deduct on the itemized deduction form from 60% of AGI to 100% of AGI for this year. The provisions for itemizers are more complicated and nuanced, so if you itemize deductions, contact a CPA for advice about your donation options.

“In this year of COVID, many nonprofits are struggling to keep their doors open and pay the bills, so any giving here at the end of the year I know will be greatly appreciated by any one of a number of local charities,” Mr. Knox said.

Small donations add up big

If you are considering making a donation but doubt your small contribution can do much good, especially compared to the sizable gifts from wealthy donors, consider the power of many people all making modest donations.

GINSBURG

GINSBURG

“Our mailing list consists of more than 5,000 patrons, so if even 3,000 of them gave us $300 each, that would cover us for about half of a traditional concert season,” said Amy Ginsburg, executive director of the Southwest Florida Symphony Orchestra in Fort Myers.

Despite not being able to currently stage full orchestra performances because of the pandemic, the Southwest Florida Symphony has been able to restart some activities, such as its youth orchestra educational program and its new tiny concert performance series featuring small ensembles performing outdoors. Even small donations help to fund these efforts as well as help the arts organizations survive the pandemic, which is critical for the future since arts events contribute as drivers of the economy because audi- ences patronize businesses such as restaurants and hotels in conjunction with performances. Arts organizations also often serve as a nexus point to coordinate benefit drives, such as the food drives and toy drives that the symphony does to collect donations for other nonprofits.

 

“The arts are an important part of the economic ecosystem,” Ms. Ginsburg said. “If we aren’t around to contribute to that ecosystem, the economy, as a whole, recovers more slowly because it takes time to get these institutions back up and running again. If some of them fold, reestablishing an orchestra, theater or ballet company doesn’t happen overnight. It took the Southwest Florida Symphony 60 years to get to where we are.”

If you’re thinking that big donations and grants surely cover all the needs of nonprofits, know that small donations can fill in and provide for needs that fall between the gaps of those large chunks that fund the budgets of nonprofits.

“We may have somebody who writes a check for $25 a year, but we get that check every year, like clockwork, for 20 years,” said Linda Lusk, chief advancement officer for The Center for Abuse and Rape Emergencies in Charlotte County.

LUSK

LUSK

Ms. Lusk explained that the organization does receive grants for specific purposes, such as the cost of running the organization’s shelter. However, the donations from small donors do not have expenditures specified for them and allow the organization the flexibility to solve the unusual problems that can arise while serving its population.

“Someone who has to leave (an abusive situation) doesn’t have time to pack anything for their kids or themselves, so they’re an adult with kids in school, but they have no birth certificates, Social Security cards or driver’s license,” Ms. Lusk said. “Those all have to be replaced and might cost $25, but they don’t have it. Unrestricted donor funds allow our organization to do all of the things that we need to do to help make our survivors whole so they can get things together for their families and get ready to transition back out into the world, get to their jobs and be successful.”

SCHWEIKHARDT

SCHWEIKHARDT

If you aren’t sure where your donation would do the most good, be aware that donations to the United Way do qualify for the special tax deduction and are a way to benefit a broad range of charitable organizations across the community. Katie Schweikhardt, vice president of resource development for United Way of Collier and the Keys in Naples, said many people came forward to donate during the Hurricane Irma relief effort. However, since then, the Tax Cuts and Jobs Act of 2017 nearly doubled the standard tax deduction. This meant many people no longer filled out the itemized tax deduction form where charitable donations are normally claimed, so the number of smaller donors has gone down.

“If ever there were a year that we could use your $300 the most, this would be the year,” Ms. Schweikhardt said. “All donations are truly valuable. We have a program where even $3 buys a child a book, so yes, every donation makes a difference. We would love to have people who donate a smaller dollar value so that they can feel that they’ve made a difference during such a hard year. We really take that very seriously, and every donation is valued and appreciated here.” ¦

   

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