The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) provides generous provisions for donors to take advantage of tax benefits for charitable giving in 2020. You, too, can take advantage by including Braille Institute – a charity for the blind and low vision community – in your year-end giving. There is something for everybody and key provisions are shared below.
As a reminder, the CARES Act was signed into law Friday, March 27, 2020, for relief from the impact of COVID-19 and was designed as economic assistance – through various stimulus benefits – for American workers and their families. The act also changed the tax benefits for charitable giving for 2020.
Key Provisions for 2020 under the CARES Act
How does the Act impact taxpayers that itemize?
For the first time ever, donors who itemize their deductions can now deduct charitable contributions up to 100% of adjusted gross income (AGI). This change allows donors to maximize donations in a single year and have more control over the impact of contributions on taxable income. Previously, this limit was at 60% of AGI. Giving beyond this 100% limitation may be carried over and used in the next five years.
How does the CARES Act impact those that do not itemize?
Taxpayers who generally do not itemize on their personal return, can take a charitable deduction of up to $300 for cash contributions to qualifying organizations on their personal return. This deduction will be an ‘above the line’ deduction and the maximum is $300 regardless of filing status.
What about gifts from an IRA?
Under the CARES Act, taxpayers could opt out of receiving most of their required minimum distributions (RMDs) from IRA’s and retirement plans; however, donors age 70½ or older can still make a qualified charitable distribution (QCD, or IRA charitable rollover) of up to $100,000. This benefit may have been minimized if donors elected to quit taking their RMD’s; conversely, the benefit of using a QCD to satisfy an RMD requirement remains a great way to make tax advantageous gifts, especially if the donor doesn’t itemize deductions. Another advantage is a QCD keeps the income out of the taxpayer’s gross income, which can influence the effective tax rate and limitations of other deductions.
What about corporate giving?
The CARES Act did change the rules for corporate giving, as well and increased the cap on how much corporations may deduct from 10 percent of taxable income to 25 percent. Although many corporations have been negatively impacted by COVID-19 in 2020, others have been able to maintain positive cash flow and may benefit from increased giving.
As a reminder, it’s always a good idea to check with your tax advisor to understand how the CARES Act rules apply to your specific situation. If you have questions, please don’t hesitate to contact us via email: plangift@BrailleInstitute.org, or Monday through Friday, 8:30 am – 5:00 pm, call (323) 210-2607.
Make a year-end donation securely online, here.