Legislation known as the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, designed to rescue the economy from the effects of the coronavirus pandemic, was passed by Congress and signed into law in March. Here is a summary of provisions applicable to charitable giving:
New Charitable Deduction for
Taxpayers who take the standard deduction rather than itemizing their deductions will nevertheless be able to claim a charitable deduction of up to $300 for cash donations made in 2020.
Higher Deduction Limits
In 2020 individuals will be able to deduct cash gifts to the extent of their entire adjusted gross income, and the deduction limit for corporations has been raised from 10 percent to 25 percent of taxable income.
Required Minimum Distributions
Waived in 2020
For the year 2020, there will be no mandatory distributions from retirement accounts (whatever the age of the owner), thus allowing those accounts to recover. The minimum age for making a tax-free transfer from an IRA to a charity remains at 70½, and the annual limit remains at $100,000. However, since cash gifts are deductible in 2020 to the extent of adjusted gross income, a person could withdraw and then contribute a larger amount, with the deduction offsetting the taxable withdrawal.
Waiver of Penalties When
Retirement Funds Are Used for Coronavirus Purposes
If you are under the age of 59½ and withdraw money from your retirement plan to cover expenses related to treatment of the coronavirus, the 10 percent tax penalty will not apply. Taxation of the distribution can be spread over three years, and the amount withdrawn can later be added without regard to contribution limits.
Contact Us and Your Advisers: The CARES Act is several hundred pages long and includes numerous provisions that could benefit you financially. Consult your advisers about these provisions, and contact us if we can help you with any gift-planning opportunities.