The Coronavirus Aid Relief and Economic Securities (“CARES”) Act, includes significant tax relief and charitable giving benefits.
TEMPORARY INCENTIVES FOR CONTRIBUTIONS MADE IN 2020
a) Individual High Net Worth Donor
If you itemize deductions, for cash contributions made in 2020, individuals and joint filers can now elect to deduct up to 100 percent of their Adjusted Gross Income (AGI) (increased from 60 percent).
For example, if Mary Taxpayer has an AGI of $100,000, she would normally be able to deduct up to $60,000 for gifts to charity. With the temporary changes in the CARES Act, Mary could now deduct up to her full AGI of $100,000 if she gives that much in cash contributions to a 501c3 charity in 2020.
Businesses can deduct up to 25 percent of taxable income, increased from 10 percent.
PERMANENT INCENTIVE FOR CONTRIBUTIONS IN 2020 & BEYOND
a) Individual Donors
If you do not itemize deductions and claim the standard deduction for individual and joint tax filers on your tax return, the CARES Act allows for an “above the line” deduction, from the taxpayer’s income prior to the calculation of their AGI, for charitable gifts made in cash of up to $300.
• These new incentives only apply to cash contributions made in the calendar year 2020 to to public 501c(3) organizations.
• These incentives do not apply to contributions to donor advised funds, family foundations or corporate foundations.
• Donors should consult with their tax / legal advisors when considering charitable giving.