CARES Act: Highlights and charitable giving in 2020
In response to the nation’s health crisis, the Coronavirus Aid Relief and Economic Security Act—or CARES Act—became law in March of 2020. While most of the act focuses on relief to individuals and businesses, there are key provisions that impact charitable giving to nonprofit organizations like the HudsonAlpha Institute. Below is a brief summary.
Non-itemizers eligible for $300 tax deduction:
A reduction in taxable income is now available for individuals who take the standard deduction rather than itemize their deductions. This inclusion creates a new above-the-line charitable deduction for cash contributions of up to $300 per individual and may encourage donors who previously did not receive a tax benefit to continue their charitable giving. The adjustment does not apply to gifts made to a Donor Advised Fund or private foundations.
Cap on deductions lifted:
For 2020 only, individuals who itemize may deduct annual contributions up to 100% of their adjusted gross income for cash gifts made to nonprofits. This adjustment may be attractive to donors who wish to make a large cash donation.
In addition, corporations may deduct up to 25% of taxable income, up from the previous limit of 10%.
Required minimum distributions waived:
The CARES Act temporarily waives required minimum distributions from most qualified retirement plans, including IRAs, allowing time for these funds to recover from market fluctuations. Individuals age 70 ½ and older can continue to make tax-free gifts up to $100,000 annually from their eligible IRAs through qualified charitable distributions directly to HudsonAlpha.
If you are interested in giving to HudsonAlpha during this unprecedented time, please consult your financial advisor or contact the Advancement team at 256-327-9446.