The CARES Act provides new opportunities to incentivize charitable giving.
The point of these changes made by Congress was to encourage increased giving to nonprofits during this pandemic.
Above-the-line universal charitable deduction. There is a universal, above-the-line, deduction of up to $300 cash made by any taxpayer ($600 if married filing jointly) – whether you itemize or not. This will reduce your taxable income for 2020.
Cash contribution caps lifted for itemizers who give to public charities. Suspension and relaxation of percentage limitations for cash gifts means donors who itemize can give more as a percentage of their adjusted gross income (AGI) and still benefit from a tax deduction. Previously, deductible gifts to public charities were generally limited to 60% of a taxpayer’s adjusted gross income (AGI); this year there’s no cap and donors can deduct up to 100% of AGI for 2020. Any excess contributions available can be carried forward for the next five years, subject to the 60% AGI limit previously in place. The increased deduction is not automatic; it must be elected. It is likely the IRS will provide further guidance as the 2020 tax filing deadline approaches.
NOTE: We are not offering professional, legal, or financial advice, and you should consult with your advisors with questions or details regarding your specific situation.