CARES Act: Key Takeaways
CARES Act: Congress passed the CARES Act which opens up pathways to help make charitable giving easier. Below are the key takeaways from this act:
- A new deduction – donors who do not itemize when filing their tax returns will be allowed to take a special tax deduction, up to $300 per tax filing unit, to reduce your tax liability. This is temporary and only available for 2020.
- An increase in the deduction limit – up to 100% of a donor’s annual income for cash gifts (previously the deduction was capped at 60% of annual income).
- Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%.
- Required Minimum Distribution (RMD) Waiver – The RMD is waived for IRA and other qualified retirement plan owners for the year 2020. Loyal donors may still wish to use IRA funds to make a qualified charitable distribution (QCD) while reducing their taxable income. The QCD is available up to $100,000 for individuals who are over age 70½.