CARES Act 2020
CARES Act Impacts Donors and Nonprofits in 2020
Signed into law by President Trump on March 27, 2020, the CARES Act
is the third piece of legislation aimed at stimulating the economy in the
United States following the onset of the Coronavirus. Nonprofit
organizations could potentially see an uptick in donor giving as the
legislation gives tax benefits to those making gifts to qualified charities.
New Deduction Available
Non-itemizers: The bill makes a new deduction available for up to
$300 per taxpayer ($600 for a married couple) in annual charitable
contributions. This is particularly beneficial to people who take the
standard deduction when filing their taxes (in other words for
taxpayers who do not itemize their deductions). It is calculated by
subtracting the amount of the donation from your gross income. It is
an “above the line” adjustment to income that will reduce your AGI,
and thereby reduce taxable income. This is not a temporary provision;
it applies to any tax year beginning after 2019. Contributions must be
cash gifts and cannot be made to a donor advised fund, certain
supporting organizations or certain private foundations.
New Charitable Deduction Limits
Itemizers: Also part of the bill, individuals and corporations that
itemize can deduct much greater amounts of their contributions. This
provision is limited to charitable contributions made in 2020.
Individuals can elect to deduct cash contributions, up to 100% of their
2020 adjusted gross income, on itemized 2020 tax returns. This is up
from the previous limit of 60%. Corporations may deduct up to 25% of
taxable income, up from the previous limit of 10%.
The new deduction is only for cash gifts that go to a public charity. If
you give cash to, say, your private foundation, the old deduction rules
apply. And while the organizations that manage Donor Advised Funds
are public charities, you do not get the higher deduction for donating
cash to your DAF. These new limits do not apply to gifts of
As always, we encourage you to contact your tax advisor to find out
how your gift can be most advantageous to you and to Subiaco
Academy. Please contact us at 479-934-1029 or email@example.com if
we can be of assistance. Thank you for your generous support!