CARES Act and Charitable Giving

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion federal relief package signed into law on March 27, is designed to help individuals, businesses, and nonprofit organizations facing economic hardship during the coronavirus (COVID-19) pandemic. Several provisions in this new legislation may influence your decisions about charitable giving this year.

New Tax Incentives

  • Taxpayers who take the standard deduction rather than itemizing their deductions will be able to claim a charitable deduction of up to $300 for cash donations made in 2020.
  • In addition, the law increases the deduction limitation for charitable cash contributions from 60% to 100% percent of adjusted gross income in 2020. A five-year carryover applies to contributions in excess of this amount, and donor-advised funds are excluded. For corporations, the deduction limitation is increased from 10% to 25%.
    • The CARES Act temporarily suspends required minimum distributions for the 2020 tax year.
    • If you are 70½ or older, you can still make a charitable gift of up to $100,000 from your IRA and exclude that amount from taxable income or name a charitable organization as a beneficiary.
    • The law also allows penalty-free early withdrawals from qualified retirement plans for
      COVID-19-related expenses (up to $100,000).
    • The SECURE Act, passed in December 2019, adjusted the minimum distribution retirement age to 72. The CARES Act places that change on hold through 2020.

This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax adviser. References to tax rates include federal taxes only and are subject to change. State law may further affect your individual results.

Forest ReLeaf of Missouri