On March 27, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act, was signed into law and made changes to encourage charitable giving to nonprofits. This bill includes a new above-the-line deduction for non-itemizers and modified certain limitations on the income tax charitable deduction to encourage donors to give in 2020. This targeted relief recognizes the important role charities play during the pandemic and provides additional tax benefits for taxpayers supporting charities.
In case you are interested in learning more:
- New $300 Deduction for Qualified Charitable Donations
Individuals who take the standard deduction can claim an above-the-line tax deduction for cash donations to qualified charitable organizations, up to $300. It remains uncertain whether Congress intends to allow this new charitable deduction for non-itemizers in future years, or if this is a one-time incentive as part of the COVID-19 disaster response.
- 60% of Adjusted Gross Income Limit Suspended for 2020
For the 2020 tax year, individuals can deduct any cash contributions made to qualified charitable organizations, up to 100% of their adjusted gross income (AGI). Deductions for cash donations were previously limited to 60% of the taxpayer’s AGI.
- Corporations’ 10% Limit Increased to 25% for 2020
For the 2020 tax year, corporations can deduct up to 25% of the taxpayer’s taxable income for any cash contributions made to qualified charitable organizations. Deductions for cash donations were previously limited to 10% of the taxpayer’s taxable income.
Charitable contributions carried over from a prior tax year (before 2020) are excluded from this temporary relief and are subject to previous limitations in the tax code. And charitable contributions to private non-operating foundations, supporting organizations and sponsoring organizations to fund donor advised funds do not qualify for the modified percentage limitations for 2020.
Gifts to Everyone Home DC COVID-19 Response Efforts
You can also support Everyone Home DC with a qualified charitable distribution from your IRA, if you are age 70.5 or older. Deduction limitations for charitable gifts to donor-advised funds, private non-operating foundations, and supporting organizations were not changed under the CARES Act.
If you have any questions or want to discuss the best way to support, please contact Kate Akalonu, Director of Strategic Initiatives at email@example.com. You can also visit our “Make-a-Gift” page to learn more.