The U.S. House and Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020. There are three significant changes our office wanted to highlight for our community.
- Cash Gifts: Individuals may deduct $300 above-the-line. This charitable deduction enables a taxpayer who is one of the 90% who take the standard deduction to also benefit from his or her charitable gifts. The $300 above-the-line deduction must be gifts of cash by a non-itemizer, and may not be to a donor advised fund or supporting organization.
- 100% Charitable Deduction Limit: The usual deduction limit for cash gifts to public charities is 60% of adjusted gross income (AGI). For 2020, gifts of cash to charity (excluding donor-advised funds and supporting organizations) are deductible to 100% of AGI. The gift may be for any charitable purpose and is not limited to gifts for Coronavirus relief.
- Required Minimum Distribution (RMD) Waiver: The RMD is waived for IRA and other qualified retirement plan owners for the year 2020. This provision will permit IRA and other qualified retirement plan owners to retain funds in their IRAs. Because the markets declined substantially after the current RMD was calculated based on the plan value on December 31, 2019, Congress determined that it was beneficial to waive the RMD for 2020. Loyal donors may still wish to use IRA funds to make a qualified charitable distribution (QCD). The QCD is available up to $100,000 for individuals who are over age 70½.
As always, please consult your tax advisor/attorney for advice on your specific situation.