In March, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed and included relief for individuals, healthcare workers, small business and certain industries substantially impacted by the pandemic. Within this guidance, there are aspects that provide individuals with additional relief on charitable contributions made during 2020. The main changes are described below and promote supporting charitable giving and your local nonprofits while also enjoying new added tax benefits.
If you are a taxpayer who does not otherwise elect to itemize deductions, you are allowed an above-the-line deduction up to $300 for charitable contributions made in cash to any qualifying Section 501(c)(3) public charity. The deduction is not available for any stock or other non-cash contributions, and excludes any donations made to donor-advised funds.
For individuals who itemize, as well as corporations, the CARES Act temporarily increases limitations on deductions for charitable contributions made in 2020. For individuals, the 60 percent of adjusted gross income limitation is suspended for 2020, meaning they can deduct up to 100% of their adjusted gross income. In addition, for donations of food, the deduction limit increased from 15 percent to 25 percent. Excess contributions may be carried forward to future years based on the existing charitable contribution carry forward rules.
Each of these changes currently only apply to 2020 and are described at a high-level above. For additional details, please consult your tax professional.