July/August 2020 Tax Tips

Feeling charitable? Now’s the time to give

In an economic downturn, charitable donations typically decline. So, if you’re in a position to donate, charitable organizations need your help now more than ever. Fortunately, the Coronavirus Aid, Relief and Economic Security (CARES) Act offers some tax incentives to support your favorite charity.

For cash gifts made to public charities in 2020, the law increases the deduction limit from 60% of adjusted gross income (AGI) to 100% of AGI. If you’re considering donating appreciated stock or other assets, generally a good strategy, this year it may be preferable to sell the assets and donate the cash.

The act also creates a new “above-the-line” deduction for cash donations up to $300 by nonitemizers.

Tax break for employer student loan repayments

The Coronavirus Aid, Relief and Economic Security (CARES) Act allows employees to exclude from income up to $5,250 in student loan repayments made by their employers between March 27 and December 31, 2020. It appears that there’s no need to show a connection between the loan repayment and the novel coronavirus (COVID-19) pandemic.

The law also permits most borrowers to suspend monthly loan payments through September 30, 2020, without penalty.

Employers: Should you reimburse employees’ remote work expenses?

One byproduct of the novel coronavirus (COVID-19) pandemic is that more employees are working remotely than ever before. As a result, these employees may incur a variety of expenses for such items as:

  • Phone and internet services,
  • Computers, monitors, tablets, printers, teleconferencing equipment, fax machines, software and other technology,
  • Desks, chairs and other office furniture,
  • Paper and other office supplies, and
  • Electricity and other utilities.

Generally, employees cannot deduct these expenses. But their employers may be able to deduct them as business expenses if they reimburse employees. And, if reimbursement is made according to an “accountable plan,” employees need not include these amounts in their income. Be aware that under some states’ laws, employers may be required to reimburse these expenses.

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