Did you know the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law in March includes provisions related to charitable giving?
For those who don’t itemize deductions, the act offers a $300 above-the-line deduction for charitable contributions. Qualifying gifts must be made in cash or cash equivalents, such as stock, and cannot be directed to DAFs.
For those who itemize their deductions, donors can now give more to charity before reaching their adjusted gross income (AGI) limitation. Previously set at 60 percent, the limitation for cash contributions to charities like the foundation is now 100 percent of a person’s AGI for 2020. Any amount given beyond this 100 percent limitation may be carried over and used in the next five years. Individuals with donor-advised funds (DAF) who exhaust the 60 percent limit can make additional contributions outside their DAF and have those gifts qualify for a deduction up to the 100 percent limit. Ask your tax advisor for clarity on your particular situation.
The CARES Act also allows any taxpayer with a required minimum distribution (RMD) due in 2020 from a defined-contribution retirement plan to skip those RMDs this year. Gifts can still be made from one’s IRA, but since no RMDs are owed this year, the amount will not offset future RMDs. Consult your tax advisor for more information.
Visit this Fidelity web page for details about charitable giving as it relates to the CARES Act. This article from The Street also does a great job at outlining your CARES Act-related charitable giving options.