Dollars & Sense: DBK Bookkeeping and Tax – A Few 2020 Tax Updates

Peggy LaShier

2020 Charitable Contributions

Previously, charitable contributions could only be deducted if taxpayers itemized their deductions. However, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations. For the purposes of this deduction, qualifying organizations are those that are religious, charitable, educational, scientific, or literary in purpose. The law changed in this area due to the Coronavirus Aid, Relief, and Economic Security Act.

The CARES Act also temporarily suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory. These contributions need to be made before the close of your tax year to be deductible.

Arizona State Tax Credit

This individual income tax credit is available for contributions to Qualifying Charitable Organizations that provide immediate basic needs to residents of Arizona. The maximum credit allowed is $800 for married filing joint and $400 for single, heads of household, and married filing separate. Donations can be made up until April 15 following the close of a taxable year and may be applied to either the current or preceding tax year.

2020 Economic Impact Payments

If you received an Economic Impact Payment (EIP), you will not need to include the payment as taxable income on your 2020 tax return or pay income tax on the payment. The EIP payment will not reduce your refund or increase the amount of tax you owe on your 2020 federal income tax return.

Those who received an Economic Impact Payment will also receive Notice 1444, “Your Economic Impact Payment.” Keep a copy of the notice for your tax records.

You may be able to claim the Recovery Rebate Credit on your Tax Year 2020 federal income tax return if you met the eligibility criteria in 2020 and:

* You didn’t receive an Economic Impact Payment, or

* Your Economic Impact Payment was less than $1,200 ($2,400 if married filing jointly for 2019 or 2018) plus $500 for each qualifying child you had in 2020.

If you need more information or want to talk about your income tax, please stop by or call DBK Tax Service, located in Bashas’ shopping Center at Alma School and Riggs Roads. Please call 480-895-7888 to talk or schedule your tax appointment.

We welcome new clients! You will get peace of mind at a small cost. Call and make your appointment today! We have extended hours for your convenience. Hope to see you soon!