Charitable Giving Under CARES Act

Don Kaiser, CPA
Focused on You. Dedicated to Your Success.
July 23, 2020

The Coronavirus Aid, Relief and Economic Security Act (CARES Act) provides incentives to encourage charitable giving and assist nonprofit organizations during these challenging times.

The CARES Act allows an above-the-line charitable contribution deduction of up to $300 for taxpayers who do not itemize deductions on their 2020 tax returns. For this purpose, a qualified charitable contribution is a charitable contribution that is (a) made in cash, (b) otherwise eligible for a charitable contribution deduction, and (c) made to certain publicly supported charities. This deduction may not be used for contributions to donor advised funds or non-operating private foundations.

For those who do itemize, cash contributions to public charities may be fully deducted (up to 100% of adjusted gross income) without regard to the usual percentage limitation. Contributions more than the taxpayer’s adjusted gross income may be carried forward for five years.

Corporations may deduct charitable contributions under the CARES Act, made in cash during 2020 in an amount up to 25% of the corporation’s taxable income (an increase of 15% from the current 10% limitation). In addition, the limitation on deductions for contributions of food inventory has increased from 15% to 25%.

The increased contribution limitations and the benefit for individuals who do not itemize apply only to cash contributions and not to donations of real estate, stock, or other items. Recipient organizations must be public charities.

We will continue to update you on new developments. Please visit our  COVID-19 Resource Page  for more alerts.

Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. You can contact me at  Donald.Kaiser@MCC-CPAs.com and Marty at  Marty.McCarthy@MCC-CPAs.com . As always, we are happy to help.

Stay safe,

Don Kaiser, CPA
Principal
McCarthy & Company

Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).