CARES Act – Part 2
Below we continue our updates of CARES Act provisions that are most relevant to our clients.
2020 Charitable Contributions:
- Individual taxpayers who take the standard deduction (instead of itemizing) are allowed an “above the line” federal income tax deduction for up to $300 of charitable contributions ($600 for a married couple).
- Since about 90% of taxpayers are taking the standard deduction, this deduction may apply to many SWA clients.
- The charitable deduction for those that donate a considerable amount to charity each year is typically capped at 60% of Adjusted Gross Income. Under the CARES Act, the cap was increased to 100% of Adjusted Gross Income for 2020 to encourage folks to donate even more to those less fortunate due to COVID-19. This could be a good year to consider grouping several years’ worth of charitable contributions into 2020 to get the most “bang for your buck” for your charitable donations.
Unemployment Income is Taxable: Many people have been affected by the economic slowdown that the US is currently experiencing--so many that the unemployment rate has increased to 14.7% (and still going higher), which is the worst since the Great Depression.
- For those of you that are receiving unemployment, it is important to remember that your benefits are taxable, and it may make sense to have some federal and state (where applicable) tax withheld from your unemployment benefits, to ensure that you aren’t blindsided by a large 2020 income tax bill.
- The extra $600 per week in unemployment benefits that is being paid on a temporary basis is also taxable.
Be on the lookout for future updates from SWA. Feel free to reach out if you have any questions regarding how the CARES Act may impact you, your family and / or your business.