CARES ACT INFORMATION
Coronavirus Aid, Relief, and Economic Security (CARES) Act: signed into law on March 27, 2020 provides some new incentives for charitable donations to nonprofits. Listed below are some of the basic details about the new charitable giving deductions created by the CARES Act. Most importantly, this information should not be considered to be financial or tax advice. Please consult with an attorney or financial advisor about these new deductions.
This new incentive can benefit any donor at any income level. A $300 donation made to VFES in 2020 is incredibly generous and much-needed!
1. Universal, above-the-line, deduction of up to $300 cash made by anyone who takes the standard deduction.
- will reduce taxable income for 2020 (this is $300 you will not have to pay in taxes even if you do NOT itemize!)
- Contributions to Donor Advised Funds or private foundations are not eligible
- Gifts must be made in 2020
- Gifts made are eligible for the above-the-line deduction in addition to the standard deduction.
Donors who are considering larger cash gifts to VFES in 2020 can benefit from the following 2 new incentives:
2. Donors who itemize can give more of their Adjusted Gross Income (AGI) and still benefit from the tax deduction.
- Individual taxpayers who itemize are allowed to elect to claim a charitable income tax deduction up to 100% of adjusted gross income (AGI), computed without any net operating loss carryback to the taxable year. Taxpayers have to elect to use the provision. This provision does not apply to contributions to a supporting organization, a donor-advised fund, or non-operating private foundations.
- For corporations, the new law raises the annual limit from 10% to 25% of taxable income.
- Gifts must be made in cash.
- The increased donation is not automatic and must be elected. (IRS will be sending out further guidance).
- It’s possible the deduction could be disallowed if the donor also makes noncash contributions. Any donor is advised to discuss this with a financial advisor or attorney if he/she is contemplating making a large cash gift and also a non-cash charitable contribution.
- There is no limit $100,000 limit on the amount they’re allowed to transfer to charity from their IRA