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.

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