Changes to Charitable Giving Tax Laws in 2020: What you need to know about the CARES Act
In these challenging times, non-profits across the country are facing declines in fundraising and donations that may impact our ability to provide the critical programs and grants that support the communities we serve. The Coronavirus Aid Relief and Economic Security Act (CARES Act), which went into effect in March 2020, includes changes to charitable contribution tax laws that benefit both donors and nonprofits and help ensure that we can continue to support the 45 kids who are still being diagnosed each day.
Here’s what you need to know:
A new deduction is available for people who do not itemize on their tax returns. Taxpayers who take a standard deduction (rather than itemizing deductions) can now take advantage of a new tax benefit for charitable giving. As an ‘above-the-line’ deduction, cash donations of up to $300 for individuals ($600 for married couples) can be applied to reduce your adjusted gross income in 2020.*
The potential impact: If you make a monthly gift to CureSearch of $37.50 starting in May, you will be able to deduct the entire combined 2020 total gift – $300 – on your taxes on top of your standard deduction. Normally, if you don’t itemize your deductions, you wouldn’t be able to deduct a gift of this size.
No limit on cash contributions for individuals for 2020. The CARES Act allows individuals who itemize to deduct larger percentages of the cash donations they make to public charities in 2020. Individuals can now deduct annual contributions of up 100% of their adjusted gross income for cash gifts made to qualified nonprofits (up from the previous limit of 60%).*
The cap on how much corporations may deduct for charitable gifts has increased. The CARES Act also allows corporates to deduct a larger amount of charitable contributions. Corporations can now deduct up to 25% of taxable income (up from10%). Ask your company if they are taking advantage of these new, higher caps on charitable donations!
To learn more about making your 2020 CureSearch donation go further, contact Melisse Skelton at firstname.lastname@example.org or (240) 235-2222.
Please consult with your tax professional for additional information or financial advice regarding the CARES Act and charitable donations.
*Does not apply to gifts made via donor advised funds