Coronavirus Aid, Relief, and Economic Security (CARES) Act Resource Page
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To qualify, make a donation to a qualified charity. Any donations made since January 1, 2o20 contribution counts toward the $300 cap. A donation to a donor-advised fund (DAF) does not qualify for this new deduction.
The law makes a new deduction available for up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions. This is beneficial for those who take the standard deduction when filing annual taxes (non-itemized deductions).
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic stimulus package, was enacted to provide immediate relief for nonprofits. Here's how you can support CCHASM and help.
New Charitable Deduction Limits: The legislation also stipulates that individuals and corporations that itemize can deduct much greater amounts of their contributions.
Individuals may elect to deduct cash contributions, up to 100% of their 2020 adjusted gross income, on itemized 2020 tax returns. This is up from the previous limit of 60%.
Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%.
The new deduction is only for cash gifts that go to a public charity.
If you give cash to a private foundation, the old deduction rules apply. For organizations that manage DAF’s are public charities, you do not get the higher deduction for donating cash to your DAF. These new limits do not apply to gifts of appreciated stock.
If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. It can be used next year, as has always been the case.
Required minimum distributions waived in 2020 for most donors: RMD for individuals over age 70 ½ is suspended until the year 2021. This includes distributions from defined benefit pension plans and 457 plans. The RMD is an attractive way for donors to make a significant charitable gift directly from their IRA to a charity through a qualified charitable contribution (QCD) while avoiding taxable income. The suspension of the RMD may dampen somewhat the incentive for a donor who makes a gift from their IRA to count toward that minimum. However, the tax benefit of the QCD remains.
Keep in mind that donors directing a QCD to charity this year (up to $100,000 per individual) will still reduce their taxable IRA balance. This allows all taxpayers, itemizers and non-itemizers alike, to direct gifts from their IRA to charities in a tax-efficient manner.