NEW ABOVE-THE-LINE CHARITABLE DEDUCTION
Included in the CARES Act is a $300 above-the-line charitable tax deduction for certain qualified charitable contributions. This will allow taxpayers who do not itemize to receive a tax benefit for a qualified gift to charity up to $300.
Under the CARES Act, “eligible individuals” who do not itemize are allowed to take the above-the-line deduction, so it is not possible to itemize and also take advantage of this deduction. Additionally, it appears that the $300 maximum deduction is applicable per tax return so that a couple filing a joint return is limited to a $300 deduction, but this is somewhat unclear at this time. These amendments apply to taxable years beginning after December 31, 2019, and there is no provision for this to sunset. Finally, there is nothing in the bill that requires charitable gifts eligible for this above-the-line deduction to be paid only to charities working directly with coronavirus relief, so donors may give to a wide variety of charities.
INCREASED PERCENTAGE LIMITATIONS FOR CHARITABLE CONTRIBUTIONS
The CARES Act temporarily modifies certain percentage limitations on charitable contributions made during 2020.
A qualified contribution is a cash gift made during calendar year 2020. This provision of the CARES Act excludes gifts to donor advised funds and supporting organizations. The 30% limitation applicable to private non-operating foundations was not changed. In addition, the 15% limitation for contributions of food would be increased to 25% for any charitable contributions of food during 2020.
Source: Council on Foundations
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