Congress enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act) on March 27, 2020 to provide relief for individuals and businesses that have been negatively impacted by the coronavirus outbreak. Understanding too that nonprofit organizations need an infusion of financial resources to maintain and expand their services throughout this pandemic, Congress has provided for certain incentives to encourage charitable contributions in 2020. We are providing a summary of these provisions and encourage you to talk with your tax and financial professional to determine if any of the following best meets your charitable giving and financial planning goals.
Partial above the Line Charitable Deduction for Individual Donors:
Provides a maximum deduction of $300 for charitable contributions for taxpayers that elect not to itemize their deductions on their tax return. The tax incentive applies to cash contributions only and does not apply to contributions to a supporting organization, a Donor Advised Fund or a carryover contribution. It is effective for contributions made in calendar year 2020.
Suspension of AGI Limits for Individual and Corporate Donors:
The CARES Act replaces the 60% of AGI charitable contribution limit with a 100% of AGI limit for 2020. This means that you can get a charitable contribution deduction for the full amount of your Adjusted Gross Income. Charitable contributions in excess of this amount can be carried forward for five years subject to the 60% of AGI limit in those years. The higher 100% of AGI limit applies to contributions made directly to charitable organizations, not to contributions to donor advised funds, supporting organizations or private foundations.
Consider donating your direct payment to charity:
Americans who pay taxes will receive a one-time direct deposit of up to $1,200, and married couples will receive $2,400, plus an additional $500 per child. The payments will be available for incomes up to $75,000 for individuals and $150,000 for married couples. Should you have the means already in place to provide for yourself and your family, please consider donating some or all of your payment to a charity.