CARES Act Offers Tax Benefits to Donors for 2020

The Coronavirus Aid, Relief and Economic Security (CARES) Act provides tax benefits which incentivize giving to non-profit organizations. Previously, taxpayers who claimed the standard deduction of $10,000 (a group which includes 92% of all taxpayers) did not get a tax benefit related to any charitable contributions they made during the tax year. The CARES Act changes this by allowing taxpayers who do not itemize their deductions to deduct up to $300 of cash contributions to public charities with an above-the-line deduction in tax years beginning in 2020. The new deduction does not apply to non-cash gifts or to gifts contributed to donor advised funds.

For the eight percent of individual taxpayers who itemize their deductions, the bill suspends for 2020 the normal limit on deductions for contributions, ordinarily 60% of the individual’s adjusted gross income (AGI) to 100% of the individual’s AGI. This increase effectively suspends the limit for individuals in 2020. For corporations, the limit on deductions for contributions, ordinarily 10 percent of AGI, is elevated to 25 percent for 2020.

These changes allow taxpayers to take a larger deduction for charitable contributions than would normally be available. Note that both of these increased limits under the CARES Act only relate to cash contributions as opposed to donations of stock, real estate, or any other non-cash items. Additionally, the increased limits for individual and corporate taxpayers are limited to contributions made to public charities, and are therefore not applicable to contributions to donor-advised funds.

Contact Missy Ketchum (ketchumm@esj.org or (904) 396-5751, x 1109) with any questions about giving to St. Mark's Episcopal Day School or about these new stipulations which will govern charitable giving for all of 2020.
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