The CARES Act and Your Gifts
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was created to assist individuals, businesses and not-for-profit organizations facing economic hardship related to the coronavirus pandemic. The Act includes some additional tax incentives to encourage charitable giving, which may affect you and your charitable goals for this year. Here are a few key provisions to keep in mind:
- For those individuals who choose to itemize your charitable deductions, you may deduct cash donations to most charities, including Bluegrass Care Navigators, to offset as much as 100% of your income. This provision is for the 2020 tax year only. Typically, the income tax charitable deduction for cash gifts is limited to 60% of your income. This year’s 100% limit allows especially generous donors to reduce their 2020 federal income tax to zero. And if your donations exceed your adjusted gross income, you can carry forward unused cash contribution deductions for up to five years.
- The CARES Act also relaxed the limitations on charitable deductions for corporations, increasing the corporate deduction limitation to 25% of taxable income in 2020 (normally limited to 10%).
- If you don’t itemize your deductions, you may still reduce your taxable income by $300 for your charitable contributions in 2020. The CARES ACT is adding a new “above the line” adjustment for up to $300 in cash contributions to charities this calendar year. This is in addition to the standard deduction!
- Most required minimum distributions from retirement plans have been eliminated for 2020. If you are 70 and a half or older, qualified charitable distributions are still a great way to make contributions. A qualified charitable distribution (“QCD” or “IRA charitable rollover”) allows you to make a taxfree gift of up to $100,000 to Bluegrass Care Navigators from your IRA.
We are incredibly grateful for your continued, generous support during this challenging time. As you consider your charitable giving for 2020, we encourage you to talk to your financial advisor regarding how the CARES Act might help you realize your charitable goals for the year.
If you have questions about how your gift can help further the important work of Bluegrass Care Navigators, please contact Laura Klumb, Vice President of Philanthropy, at 859.296.6865 or firstname.lastname@example.org.