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By Steve Wirth, Esq., EMT-P
New tax deduction
The CARES Act adds a new tax deduction available in 2020 and future years. It allows for a $300 deduction per taxpayer ($600 for a married couple) for charitable gifts on their federal income tax returns. Charitable gifts can be made to ambulance and EMS agencies that are either non-profit organizations or public agencies consistent with IRS rules. This new provision affects the vast majority of taxpayers who do not itemize deductions. It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI), and thus reduce their taxable income.
This deduction is in addition to and does not take away from the standard deduction. Taxpayers who itemize cannot take advantage of this new deduction, as their charitable contributions are reported elsewhere on the tax form.
Charitable organizations have long advocated for this type of universal deduction, and non-profit or public agency ambulance services should encourage their residents to take advantage of it when asking for the community’s help. This is particularly important since non-profit ambulance services have had to stop all in-person fundraising events such as dinners, bingo, raffles and other public events at their stations – and many citizens are asking their ambulance services where they can now help.
Higher charitable deduction limits
A second change lifts the cap on how much donors can deduct in charitable gifts in a single year. This will primarily impact more wealthy taxpayers who itemize deductions – but these are the taxpayers with more expendable income to donate. Before the CARES Act was signed into law, there were limits on the amounts that individuals could deduct – up to 60% of adjusted gross income, or AGI. The CARES Act eliminates the cap entirely for 2020, so that a donor can now fully deduct gifts to public charities equal to as much as 100% of their AGI this year.
For businesses, the CARES Act also increases the limit on the deduction for charitable contributions from 10% to 25% of a corporation’s taxable income. These increased limits for individual and corporate taxpayers apply to cash contributions only. These big changes encourage more wealthy individuals and corporations to donate more to their community ambulance service. Given the importance of ambulance services during this crisis, now is the time to ask your community to remember their ambulance service when it comes time to consider donating to a charitable organization.
There are several other tax benefits available to individuals and businesses that contribute to charitable organizations, including many ambulance services. Consult your tax advisor for how these new provisions can be leveraged to help increase charitable contributions to your community ambulance service. Many large charitable organizations are sending their constituents donation requests highlighting these new, favorable tax provisions – and non-profit and public agency ambulance services should do so as well.
Steve Wirth is a founding partner of Page, Wolfberg & Wirth, LLC and a highly regarded EMS attorney, author and speaker. He can be reached at firstname.lastname@example.org. This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor.