CARES Act: What to Know about Charitable Giving

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On March 27, 2020, the Cares Act was modified to address the challenges caused by the COVID-19 pandemic.  This important revision helps nonprofits who have been affected by the pandemic. Everyone can take a deduction up to $300 even if you do not itemize your return. This affects only the 2020 tax return.

Here is what you need to know:

  • For those who itemize deductions, an individual can deduct charitable contributions up to 100% of their adjusted gross income (AGI). This amount is up 60% over 2019 allowances.
    • The donation must be cash and received in the current year.
    • The charity must be registered as a 501(c)(3).
    • There is a limit of 40% of contributions to donor advised funds, private foundations and supporting organizations.
  • For individuals who take the standard deduction, the ruling allows for a $300 charitable contribution to their AGI. If filing married and jointly, the deduction is still limited to $300.
  • If your 2020 donations exceed the AGI limit, cash donations may be carried forward but are subject to the 60% AGI limit in the following 5 years.

We recommend that you consult your tax advisor for additional information on the Cares Act allowances.

Corporate charitable gifts 

Normally, deductions for charitable contributions by C corporations are limited to 10% of taxable income. For contributions made in 2020, the CARES Act increased the deduction ceiling to 25% of taxable income for tax years beginning in 2020.

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