In the wake of all the news surrounding the COVID-19 Pandemic, passage of the CARES Act came as a breath of fresh air to many Americans – for many different reasons. Provisions designed to stimulate charitable giving were particularly welcome in the nonprofit world. Following is a summary of the elements of the bill most relevant to those interested in making charitable gifts.
• Donors who itemize may now deduct cash gifts up to 100% of their AGI - Adjusted Gross Income. This represents an increase from the 60% limit authorized in previous legislation. The IRS has not issued guidance for donors who give both cash and appreciated property in 2020. Consult your tax advisor for the implications of this provision on your own situation.
• Non-itemizers may now take a charitable tax deduction of up to $300 for cash donations, on top of the standard deduction. This provision is for the year 2020, but may continue in the years ahead. Consult your tax advisor for guidance on this provision.
• In the case of both the itemizer and non-itemizer, the deductions only apply with donations to qualified public charities. Gifts to donor advised funds and supporting organizations do not fall into that category.
• For the year 2020, IRA owners are exempt from taking Required Minimum Distributions (RMD) from their accounts. However, persons who are 70 ½ or older may still make a charitable distribution from an IRA directly to charity of up to $100,000.
This summary is for information and should not be construed as professional advice. As always, it is best for you to consult with your tax advisor to gain a full understanding of the effect of these provisions on your individual tax situation.