CARES Act Incentives for Charitable Giving
It’s been a while since the CARES Act was enacted at the end of March, but it’s not too late to take advantage of the charitable giving incentives that were included in the Act.
How the CARES Act Impacts Charitable Giving in 2020
For individuals who itemize
The Act suspended the 60% of adjusted gross income (AGI) limit for 2020. As a result, individuals can deduct cash contributions to qualified charitable organizations up to 100% of AGI this year.
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 made in 2020 to qualified charitable organizations.
For the 2020 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.