The COVID-19 pandemic has been devastating on every level.
In recognition of the economic impact of this pandemic, the US government has made some critical modifications to existing tax laws for 2020 to promote charitable giving to nonprofits like MAP International that are responding to emergency aid requests while continuing critical operations.
There are many provisions of the CARES Act. However, there are a number of important changes that directly affect charitable givers like you.
CARES Act Provisions
- Temporary charitable deductions of up to $300 are allowed for gifts made to charitable organizations. The provision is intended for 2020 only; however, the text of the bill states that taxable years do not include a sunset date. Thus, it conceivably could extend beyond 2020. The deduction is ONLY for gifts of cash made in calendar year 2020 and does not cover other types of gifts or contributions made to donor-advised funds or private foundations.
- A suspension of 60 percent adjusted gross income limitation for individuals’ charitable contributions for the year 2020. In a typical year, individuals can only take a charitable deduction of up to 60 percent of their adjusted gross income, no matter how much they give. For 2020, there is no limit, making cash contributions fully deductible.
- An increase in the cap on how much corporations may deduct for charitable gifts from 10 percent of taxable income to 25 percent.