The bill makes a new deduction available, without itemizing, of up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions in 2020.
For those who itemize in 2020 only, the CARES Act allows deductions of contributions up to 100% of their adjusted gross income. Corporations may increase giving to 25% of their taxable income.
New deduction is for up to $300 per taxpayer ($600 for a married couple) in annual charitable contributions in 2020. This is for people who take the standard deduction when filing their taxes. (They do not itemize their deductions.) Contributions made by cash, check, credit card to a 501(c)3 tax-exempt organization qualify. Property, clothing/goods, and stocks do not qualify. Contributions made since January 1, 2020 may be counted toward the $300 cap. (Donations to a donor-advised fund (DAF), and some other select funds/foundations do not qualify for the deduction.)
Taxpayers will list it as an adjustment to income on Schedule 1 of Form 1040, and then deduct it from their gross income (along with any/all other adjustments to income) on the first page of their 1040. For 2020 only, the CARES Act allows itemizers to deduct contributions up to 100% of their AGI. Thus, for example, if someone’s AGI is $100,000, they may deduct $100,000 in charitable contributions and wipe out their income tax liability entirely.
Donors who use this provision must tell the IRS. Any contributions in excess of total AGI may be carried forward for up to five additional years.
HR 748 Sec. 2204 and Sec. 2205
www.nolo.com | www.wish.org/stimulus | www.independentsector.org | https://www.councilofnonprofits.org | https://bit.ly/2JsC20X
Please consult your Tax Advisor or Financial Planner about your specific situation before considering taking advantage of the CARES ACT.