Coronavirus Aid, Relief and Economic Security (CARES) Act - Impact on Charitable Giving

On March 27, the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act. Details are still a bit unclear, but here is what we know up to now.

1. Generally, taxpayers who claim the standard deduction do not get a tax benefit related to any charitable contributions they make during the tax year. But that will change slightly beginning in 2020. The phrase “above the line” means that taxpayers can deduct charitable gifts up to $300 even if you don’t itemize your charitable deductions. The $300 charitable deduction is available only for cash gifts (as opposed to donations of stock, real estate, or any other non-cash items) to public charities like the Community Foundation of Grant County. Unfortunately, gifts to donor-advised funds do not qualify.

Note: This is important, because after the passage of tax reform in 2019, only about 10% of Americans itemized their taxes. The new law would allow you to deduct up to $300 from your taxable income. Importantly, what we have read so far indicates that those who itemize won’t get the $300 above the line charitable deduction.

2. In addition, for 2020, the income limit for cash contributions to charity rises to 100% of AGI (from the current 60% AGI limit). As with current law, any cash gifts in excess of that limit can be carried forward to the next year. Note:  Donor advised funds do not qualify for the 100% income limitation.

3. Another important provision is the repeal of the required minimum distributions (RMD) for 2020. This is important because donors can use a Qualified Charitable Deduction (QCD) to make a gift to charity to satisfy your RMD requirement. For 2020, no one will be subject to the RMD requirement — though you can still, if you wish, make a QCD gift to a charity like the Community Foundation.

4. Finally, for taxes due for 2019, the tax filing deadline has been moved to July 15, 2020.

Information is changing rapidly; this post should not be construed as tax or investment advice. Contact your tax or legal professional for more information, and we will post more details as they are available. 

If you would like to donate now to support frontline nonprofits in northern Illinois through the local COVID-19 Emerging Needs Fund, learn more and give here:

If you or someone you know works for a nonprofit organization that serves people in Boone, Ogle, Stephenson, or Winnebago County please let them know about the local coordinated effort to support nonprofits, the 815 Community Response Team: