Updates: The CARES Act and Charitable Giving

In March 2020 the U.S. Federal Government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among its benefits is increased tax incentives for charitable giving, including the following:

New charitable deduction for taxpayers who do not itemize

Beginning in 2020, individuals can deduct $300 in charitable contributions from their gross income, even if they do not itemize their deductions. Donations must be made by cash, check, or credit card to a 501(c)(3) nonprofit.

No cap on charitable deductions for taxpayers who do itemize

Donors who itemize their deductions can usually deduct cash contributions up to 60% of their adjusted gross income. For 2020, that cap is lifted, and donors contributing to charity may deduct up to 100% of their income, a significant tax savings for anyone able to contribute larger amounts.

No required minimum distributions, but qualified charitable distributions still possible

The CARES Act eliminates required minimum distributions (RMDs) from many retirement plans in 2020. Some donors have been using their RMDs for tax-advantaged charitable gifts by making a qualified charitable distribution (QCD) directly to charity. Under the CARES Act it is still possible for donors who are 70½ or over to contribute up to $100,000 directly to a charity without paying tax on the distribution. This remains a beneficial way for donors to make gifts.

The CARES Act is a complex new law. Please consult with your financial advisors before making a significant gift, and thank you for supporting Plymouth Christian Youth Center.

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