CARES Act Giving Options

For those who do not itemize on their taxes:

• Cash Gifts – Individuals may deduct $300 above-the-line. This charitable deduction enables a taxpayer who is one of the 90% who take the standard deduction to also benefit from his or her charitable gifts. The $300 above-the-line deduction must be gifts of cash by a nonitemizer, and may not be to a donor advised fund or supporting organization.

For those who do itemize on their taxes:

• The usual deduction limit for cash gifts to public charities is 60% of adjusted gross income (AGI). For 2020, gifts of cash to charity (excluding donor advised funds and supporting organizations) are deductible to 100% of AGI. The gift may be for any charitable purpose and is not limited to gifts for Coronavirus relief.

Required Minimum Distribution (RMD) Waiver:

• The RMD is waived for IRA and other qualified retirement plan owners for the year 2020. This provision will permit IRA and other qualified retirement plan owners to retain funds in their IRAs. Because the markets declined substantially after the current RMD was calculated based on the plan value on December 31, 2019, Congress determined that it was beneficial to waive the RMD for 2020. Loyal donors may still wish to use IRA funds to make a qualified charitable distribution (QCD). The QCD is available up to $100,000 for individuals who are over age 70½.

Opportunities for Businesses:

• Business entities, which are generally limited to deducting charitable contributions of up to 10% of their taxable income, are permitted by the CARES Act to deduct qualified contributions of up to 25% of their taxable income, less the amount of their other charitable contributions (which are still limited to 10% of their taxable income).

Talk to your financial advisor for more information, and to see what may be best for your circumstances.

Source: CARES Act – Three Big Changes