The CARES Act of 2020 provides a rare opportunity to increase charitable giving, offering incremental tax benefits *
Some of the new provisions are as follows:
- For individuals who itemize deductions, the maximum deductible amount has been raised from 60% of Adjusted Gross Income (AGI) to 100%, with a requirement that the increment above 60% must be in cash made directly to charitable organizations. Cash gifts above 100% may be carried over to future years. As before, the maximum appreciated asset deduction allowed on the first 60% is 30% of AGI.
- Individuals who claim the standard deduction are now allowed a $300 “above-the-line” adjustment to AGI ($600 for joint filers), effectively reducing AGI by that amount. While most provisions of the CARES Act pertain to 2020 only, this benefit for standard deduction filers will be extended to 2021.
- The deduction ceiling for charitable giving accompanied by rollovers of IRAs into Roth IRAs has been eliminated for this year (compared to $100,000 previously).
- The allowed deduction for cash donations to charitable organizations has been raised from 10% to 25 of AGI for 2020 only.
*This information is general and educational in nature, and should not be construed as tax or legal advice. Please consult with your advisors.