The CARES Act and Charitable Giving
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. This legislation is aimed at providing relief and assistance to those who are being negatively impacted by the coronavirus crisis. One intent of the bill is to motivate charitable giving by individuals and organizations with tax incentives. Here are 5 things you need to know about charitable giving in view of the CARES Act:
- The adjusted gross income (AGI) limit was increased for cash donations for those who are itemizing deductions. Prior to the CARES Act, an individual could deduct their cash donation to public charity up to 60% of their AGI. Now you can elect to deduct up to 100% of your AGI for cash donations.
- If you are not itemizing your deduction, and instead taking the standard deduction, you can take an “above the line” deduction for charitable gifts made in cash of up to $300 ($600 for a married couple).
- The AGI limits for corporate donors of cash contributions was also increased. Corporate donors can now deduct up to 25% of taxable income (up from 10%).
- While the CARES Act waives required minimum distributions from IRAs this year, IRA owners who are over the age of 70 ½ can still make a qualified charitable distribution of up to $100,000 directly to charity, and exclude that distribution from their income.
- These tax incentives only apply to cash donations to public charities and do not apply to cash donations to donor advised funds, private foundations or supporting organizations.
Charities are crucial during a crisis like this. These tax incentives can help individuals and corporations strengthen their financial impact on charities as we all work toward recovery and brighter days ahead.
This information is not intended as legal or tax advice. Please consult an attorney or tax advisor when considering charitable contributions. For more information, please contact Emanate Health Foundation at 626.814.2421 or firstname.lastname@example.org.