Benefits Of The CARES Act For Donors
We want to let you know about a few key provisions of the new CARES (Coronavirus Aid, Relief, and Economic Security) Act. This new law is designed to help you, businesses and nonprofits facing economic hardship during the coronavirus pandemic.
The new law allows all taxpayers to take a charitable deduction of up to $300, even if you do not itemize. You might think that this is a small amount and would not make a difference. But what if all of our donors gave “just” $300? Such support would have a huge impact on the 4-H Program.
The universal charitable deduction is an above-the-line deduction and will be available to taxpayers who take the standard deduction. This tax incentive is available for gifts to qualified charities (and not to donor advised funds).
Example: A taxpayer who takes the standard deduction and makes a $300 cash gift to a public charity in 2020 may claim the $300 deduction in computing his or her adjusted gross income. The deduction is in addition to the taxpayer’s standard deduction.
For those who do itemize their deductions, the new law allows for cash contributions to qualified charities such as ours to be deducted up to 100% of your adjusted gross income for the 2020 calendar year.
Contributions to public charities are generally limited to a percentage of a taxpayer’s adjusted gross income (AGI). The new law lifts the cap on annual contributions for those who itemize, increasing it from 60% to 100% of AGI for 2020. Any excess contributions available can be carried over to the next five years. For corporations, the new law raises the annual limit from 10% to 25% of taxable income.
The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This probably comes as a relief to many of you who would have had to withdraw a greater percentage of your retirement accounts. Many of our donors use their RMD to make a gift from their IRA. If you are 70½ or older, you can still make a gift from your IRA or name us as a beneficiary. In addition, there are some new ways you can receive financial benefits and help organizations like us.
The legislation also delays the 2019 tax filing deadline from April 15 to July 15, in addition to other benefits.
As always, please consult your financial planner or tax advisor to determine the impact of these new laws on your individual situation.
We are so grateful for your generosity, which touches—and changes—so many lives.