Above-The-Line Charity Deduction

 

The IRS will now allow up to $300 cash only deductions on your tax return without itemizing. An above-the-line deduction means that this is a deduction against regular income to determine adjusted gross income and before calculating the standard deduction.

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Regular Charity Donations Under Itemized Deductions

Are Now Up To 100% Of Adjusted Gross Income

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Under itemized deductions (certain personal deductions used if exceeds standard deduction) you can now make charitable donations up to 100% of your adjusted gross income (normally 60%). Donations must be made to a 501(c)3 organization and donations do not have to be related to the Covid19 event.

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Withdrawals Up To $100,000 From Retirement Accounts

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Until December 31, 2020 you can withdraw up to $100,000 from a retirement fund such as a 401(k) or an IRA. The withdrawal has to be related to the Covid19 event and it applies to taxpayers who have been diagnosed with the Coronavirus illness, or has been financially affected as a result of:

• Being quarantined, furloughed, or laid off;

• Having work hours reduced due to the virus;

• Being unable to work due to a lack of child care;

• The closing or reducing hours of a business owned or operated by the individual due to
  such virus; or

• Other factors determined by the Secretary of Treasury

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The administrator of the fund may determine the criteria for the withdrawal. The federal 10% premature withdrawal penalty will not apply. However the withdrawal must be included as income either as a lump sum in the current year, or spread out over a three year period. No federal withholding is required for this type of withdrawal. Repayments to the retirement fund can be made over a three year period which means that an amended return will be filed for any year that a repayment is made.

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