It’s September! And you all know what that means, right?! It’s time to deck the halls, light the menorah and plan your Karamu menu! It’s time for stores and car companies to fast forward through time and space (past the less lucrative holidays) to get to those sweet, sweet December festivals! While Bourke Accounting isn’t the type of establishment to stock scary Halloween masks next to brightly lit Christmas trees, there is something you should know about the upcoming months.
In the not too distant future, you are going to start receiving pleas from established charities and benevolent organizations – and, whether you’re religious or not, giving to those less fortunate is always in season (especially during the cold months). However, since the virus has touched down, there’s more people who could benefit from charities rather than finance them. Is there a way to help everyone all at once this holiday season? Maybe a little.
At this point, you know that the Tax Cuts and Jobs Act raised the standard deduction to the point where it doesn’t make sense for most Americans to itemize their deductions; in fact, less than 15% of citizens receive any sort of benefit from itemization now (TheConversation.com). For those who aren’t going to exceed $24,800 (married filing jointly) or $12,400 (single filer) in deductions this year, there is now an added incentive to give a little this season.
After the introduction of the TCJA, there was a noticeable decline in charitable donations from taxpayers (Kiplinger.com). Although this makes one question the concept of genuine altruism, it seems that some lawmakers have realized that just asking for charitable help isn’t going to cut it during the age of Corona. So, in March, the Coronavirus Aid, Relief and Economic Security (CARES) Act changed the rules a bit. Now, even non-itemizers are allowed to write off $300 ($600 for jointly filed returns) for charity donations.
Before anyone gets any fancy ideas, this write-off is meant for cash gifts only (Philanthropy.com) – so don’t try to donate a broken $15 scooter and expect the full deduction. Also, even though the IRS has been busy recently, don’t think that our bean-counting pals aren’t still watching. Like always, donations must be given to qualified charitable organizations; this means that giving your adult brother pizza and beer money won’t count. Also, and, just for kicks, make sure that you save your documentation reflecting the gift amount. The chances that auditors will bother to investigate a $300 deduction are slim, but you can never predict when there will be a slow day in the IRS office.
Although this new rule is an enticement to give, it’s not going to alter anyone’s tax return very much. Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, points out that, for those in the 10% tax bracket, the difference would be about $30 (CNBC.com). We all know that it’s better to give than to receive, but, sadly, there aren’t that many Americans who will be able to make use of this incentive this year.
If you can donate this year, that’s great – you’ll help a lot of people. Keep in mind, however, that a lot people can also be helped with time and talent, too. It’s not always about money…
Bourke Accounting believes in charity and helping their fellow people. Bourke Accounting also believes in knowing all of the new regulations that can alleviate some tax burdens. During good times and bad, your Bourke Accounting tax preparers and bookkeepers are the professionals with the big hearts. Happy (Premature) Holidays!
Written by Sue H.