Americans have always been a generous people and many are looking for additional ways to give during these challenging times. According to the Charities Aid Foundation (CAF) World Giving Index 10th edition, the United States has rated as the highest scoring country for giving over the last 10 years.1 This past March, the CARES ACT (Coronavirus Aid, Relief and Economic Security Act) was signed into law with provisions increasing the tax incentives for giving to charity this year.
If you are looking to give before year end, here are two unique opportunities to give in 2020:
- $300 cash contributions: The CARES Act allows for an additional “above the line” deduction for charitable gifts made in cash of up to $300. For folks not itemizing on their 2020 taxes, you can claim this new deduction. 2
- Increased Adjusted Gross Income (AGI) limit: If you are itemizing deductions, the adjusted gross income (AGI) limit for cash contributions has been increased for individuals. Instead of electing to deduct up to 60 percent of your AGI, you can deduct up to 100 of your AGI for 2020 for cash contributions. 3
The CARES Act did not change the rules for Qualified Charitable Distributions (QCDs). For those IRA holders who are 70 ½ or older, you can still make a Qualified Charitable Distribution directly to charity without taking the distribution as taxable income. The annual limit is $100,000 per individual from IRA assets.
As always, please seek tax advice from a professional tax preparer familiar with your specific tax situation. The tax information provided is general and educational in nature and should not be construed as legal or tax advice.
1 CAF World Giving Index 10th Edition – 10 Years of giving trends, October 2019 - https://www.cafonline.org/docs/default-source/about-us-publications/caf_wgi_10th_edition_report_2712a_web_101019.pdf
2 How the CARES Act changes deducting charitable contributions - https://www.irs.gov/newsroom/how-the-cares-act-changes-deducting-charitable-contributions
3 Charitable Contribution Deductions, Temporary Suspension of Limits on Charitable Contributions - https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions