08 Aug Legacy Newsletter – Aug. 2020

How the CARES Act Might Impact Your Philanthropy
The CARES Act provides increased tax incentives for charitable giving for both individuals and corporations. How could that affect your philanthropy?

Here are a few ways the CARES Act could impact your philanthropy*:

• Temporary lifting of the adjusted gross income (AGI) limitation for cash gifts made by an individual to charitable organizations. Potentially this means that taxpayers who make charitable contributions in cash during 2020 and itemize may deduct up to 100 percent of their AGI for qualifying gifts made this year. This applies to cash contributions only, not to contributions to a donor-advised fund or supporting organization.

• Temporary Universal Charitable Deduction—Taxpayers who do not itemize their deductions can take a one-time deduction of up to $300 for gifts made to charitable organizations. The provision is intended only for the year 2020; however, in the text of the bill, it states taxable years “beginning in 2020 …” and does not include a sunset date, thus it conceivably could extend beyond 2020. The deduction is ONLY for gifts of cash made in calendar year 2020 and does not cover other types of gifts or contributions made to donor-advised funds or private foundations.

• Suspends the 60 percent adjusted gross income limitation for individuals’ charitable contributions for the year 2020. In a typical year, individuals can only take a charitable deduction of up to 60 percent of their adjusted gross income, no matter how much they give.

• For 2020, there is no limit, making cash contributions fully deductible.

• Waive the 2020 the required minimum distributions from retirement plans, such as pensions and 457 plans. Any minimum distributions from retirement plans that would have been required in 2020 can be delayed until 2021. This change reduces the incentive for donors to make gifts from their individual retirement account (IRA)—the IRA Rollover Provision.