The CARES Act and your Charitable Gift

Possible new tax benefits for your contributions.

The CARES Act has been making headlines for stimulus payments and new loan options, but did you know it may include additional tax benefits for you if you make a charitable gift this year?

The Act established several new provisions that you may be eligible for, depending on how you file your taxes.

  • For tax payers who do not itemize: It allows taxpayers who utilize the standard deduction to take deductions on cash contributions up to $300 to organizations like ARL for the 2020 tax year.

  • For tax payers who itemize: It increases the charitable deduction amount from 60% to 100% of adjusted gross income (AGI), after this cap, additional contributions can be carried forward and deducted over the next five years.

However, these new benefits do have some restrictions:

  • Only cash gifts are eligible. This means gifts of stock, vehicles, land, or other goods will not qualify
  • Gifts to establish or to add to Donor-Advised Fund accounts do not qualify
  • Gifts must be made to public charities like ARL, as gifts to private foundations do not qualify

Updates to Required Minimum Distributions (RMD):
For most facing RMDs in 2020, your distribution may be delayed until 2021. However, you are still able to make qualified charitable distributions (QCD) up to $100,000 from your IRA in 2020 to charities like ARL in a tax-efficient manner.

Be sure to keep copies of your gift receipts as you may be required to substantiate your contributions. Always consult your financial advisors or a tax professional when seeking financial or tax advice.