Disclaimer: Kibale Uganda Development Union, Inc and The Home of the Holy Angels do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
- People who make smaller gifts will be able to deduct them up to $300. This deduction is specifically for taxpayers who do not claim itemized deductions. For the rest of 2020, an individual will be able to deduct up to $300 for charitable contributions in addition to claiming the standard deduction. This “above the line” deduction can be used for contributions only of cash (not stock) to qualified charitable organizations.
- People who make larger gifts will be able to deduct a much higher amount. Under current law, an individual may deduct up to 60% of their adjusted gross income (AGI) for charitable deductions of cash. The stimulus package lifts that restriction, so that an individual can make a gift only of cash (so once again not stock) and deduct it up to 100% of their AGI for the year 2020. This is an election, so the donor who wants to use this provision must tell the IRS so. This is helpful for wealthierdonors; it could allow a person to make charitable gifts that eliminate their tax burden. Any contributions in excess of total AGI may be carried forward for up to five additional years. These contributions may not be used to fund Donor Advised Funds or Supporting Organizations.
- Corporations have much greater incentives to make charitable gifts. There’s also a substantial benefit for corporate charitable gifts. Usually this is limited to 10% of taxable income for the corporation. That limit has been increased to 25% of the taxable income, making charitable gifts much more attractive to many companies.
The text of the CARES Act can be found in it’s entirety here: S.3548 – CARES Act