The Coronavirus, Aid, Relief, and Economic Security (CARES) Act, enacted into law on March 27, provides significant tax benefits for donors who support public charities like the DC Bar Foundation who have been impacted by COVID-19.
Non-Itemizers Deduction. For 2020, non-itemizers (those who take the standard deduction) can also take an “above-the-line” charitable deduction for cash gifts up to $300 per individual ($600 for a married couple filing jointly). This excludes gifts to donor-advised funds.
Adjusted Gross Income (AGI) Limits Waiver. For 2020, current AGI limits for charitable deductions of cash gifts made by individuals and businesses are waived. The new deductions limits are:
Individuals: Can deduct charitable contributions up to 100% of adjusted gross income. (The previous limit was up to 60%.) This provision excludes gifts to donor-advised funds.
Corporations: Can deduct charitable contributions up to 25% of taxable income. (The previous limit was up to 10%.)
IRA Required Minimum Distributions (RMDs) are waived. Although RMDs have been waived for 2020, donors may still authorize a qualified charitable distribution for up to $100,000 per individual, thus reducing their taxable IRA balance.
This should not be construed as legal advice and donors should consult with their accountant or tax attorney.