CARES Act & CAA Incentives for Charitable Giving
Good news! The charitable giving incentives provided in 2020 by the CARES Act were extended through 2021 when the Consolidated Appropriations Act, 2021 (CAA) was enacted on December 28, 2020. The available incentives are summarized below.
Charitable Giving Incentives for 2020 and 2021
For individuals who itemize
The Acts suspended the 60% of adjusted gross income (AGI) limit for 2020 and 2021. As a result, individuals can deduct cash contributions to qualified charitable organizations up to 100% of AGI.
For individuals using the standard deduction
Individuals who take the standard deduction can claim an above-the-line tax deduction up to $300 for cash donations to qualified charitable organizations ($600 for joint filers).
For the 2020 and 2021 tax year, corporations may deduct up to 25 percent of taxable income for cash contributions to qualified charities, up from 10%. In addition, the cap for corporate food donations was increased from 15% to 25%.
Even though gifts to donor advised funds and private foundations were excluded, gifts to the Community Emergency Response Fund, the Old Bill’s Match Fund, and the Community Foundation itself DO qualify for these incentives. As do year-end gifts to all of your other favorite charities. Gifts of appreciated securities were also excluded from these incentives, but they continue to offer meaningful tax benefits and may present an alternative, attractive year-end gift option in the face of potential tax law changes in the coming year.