Charitable Giving and the 2020 CARES Act

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act, more widely known as the CARES Act. This Act provides significant tax relief and charitable giving benefits of both small and large gifts donated in 2020.  Here’s a summary of these gift-planning strategies:

100% deduction for cash gifts to public charities

• Individuals may now deduct up to 100% of their gross income for cash (or check) donations to public charities; this is a 60% deduction increase.

• This increased deduction ceiling applies only to public charities.

• All public charities are eligible, not just those involved in coronavirus relief.

“C” corporations also qualify for the charitable gift deduction

The CARES Act increased the deductible limit for “C” corporations cash donations to 25% of taxable income, up from 10%, for contributions to public charities.

Five-year carryover for excess gifts 

Donations that exceed the gross income/taxable income limits have a five-year carryover, with limits reverting to the 60%/10% limit in 2021 and later years.

Special charitable deduction for non-itemizers

Individual taxpayers who do not itemize for 2020 may claim a deduction, from their gross income, for up to $300 in cash donations to public charities.  This deduction could be especially advantageous for non-itemizers given it reduces adjusted gross income (possibly affecting eligibility for other tax benefits).  This is also on top of the standard deduction.

Please check with your trusted tax advisor on the particular benefits available to you.