The CARES Act and New Charitable Giving Opportunities in 2020
Passed in late March 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided over $2 trillion in economic relief to taxpayers, businesses, and nonprofits. The Act also contained a number of changes to tax policy related to charitable gifts of cash to public charities like the Stony Brook Foundation:
Non-Itemizers Now Eligible for New $300 Charitable Deduction : Taxpayers who take the standard deduction (non-itemizers) typically do not qualify for itemized charitable deductions. For these non-itemizing individuals in 2020, a $300 above-the-line adjustment will be made to reduce the donor’s adjusted gross income and thereby reduce taxable income.
Increase in Adjusted Gross Income Limit from 60% to 100%: The usual deduction limit for cash gifts by individuals to public charities is 60% of adjusted gross income (AGI). In 2020, gifts of cash are deductible to 100% of AGI.
Increase in Corporate Charitable Deduction from 10% to 25%: The taxable income limit that applies to cash contributions by corporations has been increased from 10% to 25% for 2020.
Waiver of Required Minimum Distribution (RMD) for Retirement Plans:
Most taxpayers will not have a RMD from their retirement plans in 2020, including
IRAs, 401(k)s, 403(b)s and most other defined contribution plans maintained by an
employer for individuals. However, making a Qualified Charitable Deduction this year
will still enable both itemizers and non-itemizers to contribute up to $100,000 from
their IRA to the Stony Brook Foundation in a tax-efficient manner or name the Foundation
as a beneficiary.
As always, please consult a tax adviser concerning your specific situation.