to End Poverty
to End Poverty
Information on the Cares Act of 2020
The CARES Act of 2020 includes provisions to incentivize individuals and corporations to make cash contributions to public charities in 2020, including:
1. Above-the-line deduction. Under prior rules, individuals who did not itemize their deductions on their income tax returns could not take a charitable deduction for cash contributions to qualified charities. The CARES Act adds a new above-the-line deduction that allows all individuals a $300 deduction for cash contributions to a qualified charity.
2. Relaxed limitations on deductions for individuals. For individuals who choose to itemize their deductions, the CARES Act increases the allowable deduction for cash contributions to a qualified charitable organization to 100% of the individual’s adjusted gross income in 2020. If the contribution exceeds the limitation, the individual can still carry forward and utilize the excess amount over the following five years.
3. Relaxed limitations on deductions for corporations. For corporate taxpayers, the CARES Act increases the limitation for cash contributions to qualified charities to 25% of taxable income in 2020. The corporation can also carry forward and utilize any excess amount over the following five years.Additional tax planning opportunities:
4. Contribution of publicly traded stock. Individuals who donate publicly traded stock, if held longer than one year, can deduct the fair market value of the stock as a charitable contribution. Additionally, if the publicly traded stock has appreciated in value, individuals do not need to report the gain as income on their tax return.
5. Qualified Charitable Distribution from IRAs. Individuals who are 70 ½ may exclude up to $100,000 each year of otherwise taxable IRA distributions if the distribution is paid directly from the IRA to a qualified charity.The above is general guidance on potential tax saving opportunities. Please consult your tax attorney or CPA about how the above can apply to your personal situation.
*This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.