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Information about the CARES Act

Learn more about the tax implications of the CARES Act

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law in March 2020 in response to the COVID-19 pandemic. In combination with other recent legislation, it has added significant incentives to charitable giving. However, many experts believe these benefits will sunset on December 31, 2020. The information below is summarized from the IRS website and provided here as a convenience. We encourage our donors to consult with their tax advisors to determine how they can incorporate these changes into their charitable giving.

One major change for 2020 is that the cash giving limits on charitable contribution tax deductions have been temporarily suspended. In past years, donors were restricted to a maximum deduction of 60% of their adjusted gross income (AGI). One implication is that donors who are considering making future gifts may consider “bundling” them with their 2020 donations in order to benefit from the increased deduction. Note that this applies only to cash donations: appreciated property, such as a stocks and bonds, have retained their deduction caps.

Another change is that taxpayers who choose not to itemize deductions are allowed take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations, which are defined by the IRS as those that are “religious, charitable, educational, scientific or literary in purpose.”

A third major change under the CARES Act is that Required Minimum Distributions (RMDs) from IRAs, 401(k)s, 403(b)s and most other defined contribution plans are not required for 2020. Nevertheless, making a direct charitable distribution from an IRA (a Qualified Charitable Distribution or QCD) retains a benefit for donors aged seventy-and-a-half and older: a QCD of up to $100,000 from an IRA will bypass recognition for income tax completely.

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