Charitable Deductions in the CARES Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by President Trump on March 27th, 2020. It was the third COVID-19 related bill enacted by Congress. There are several charitable giving benefits included in the Act.
- A new charitable deduction is available in the CARES Act to individual taxpayers that do not itemize their deductions. This new benefit, also referred to as a universal deduction, allows for a charitable deduction of up to $300 per individual. This is an above-the-line deduction from the individual taxpayer’s income prior to the calculation of their adjusted gross income. This is the one charitable giving benefit that will extend beyond the 2020 tax year.
- Individual taxpayers who DO itemize their deductions can now deduct 100% of their adjusted gross income. Prior to the CARES Act, the deduction for qualified charitable contributions made by itemizing individual donors was limited to 60% of their adjusted gross income.
- Corporations can now deduct up to 25% of their taxable income for charitable contributions, up from 10% before the CARES Act.
In order for a charitable donation to qualify as one of these special deductions, it must meet some general requirements:
- It must be a cash donation, not a donation of property or marketable securities.
- The donation must be made, in almost all cases, to a public charity - not a private foundation or supporting organization.
- The donation can not be made to a Donor-Advised Fund (DAF).
- To qualify for the enhanced deduction limits of 100% for itemizing individual taxpayers and 25% for corporations, the charitable contributions must be made during the 2020 calendar year. The $300 individual taxpayer above-the-line charitable deduction is understood to extend beyond the 2020 tax year.
The donation does NOT have to go to an organization or cause specifically related to COVID-19 relief efforts.
If you would like to take advantage of these tax benefits, contact NDCF at 701-222-8349 for more information about our over 700 qualifying charitable funds.
The North Dakota Community Foundation is not engaged in rendering legal or tax advice. This article is meant to provide general information about the charitable-giving deductions included in the CARES Act. The Foundation recommends that any prospective donor consult their tax or legal advisor before entering into a giving program.