Caring for our Community
What the CARES Act means for your charitable giving
During 2020, the Coronavirus has affected millions of Americans and small businesses. This has resulted in significant federal aid and private donations towards the relief effort. If you have personally donated to a charity during 2020, then you may qualify for a new deduction under the CARES Act. The CARES Act outlines the following changes to charitable giving:
*A new temporary deduction in 2020 for cash donations up to $300, even for taxpayers that do not itemize deductions. This is an “above the line” deduction.
*For taxpayers that itemize deductions, the adjusted gross income limit for charitable gifts of cash was increased from 60 percent to 100 percent for 2020 only. This could allow taxpayers to completely wipe out their AGI and their tax liability with a charitable contribution.
If you were subject to required minimum distributions (RMD) in 2020, the good news is that the CARES ACT suspended the RMD requirement. But you can still contribute up to $100,000 from your IRA to a qualified charity in 2020. The check has to be written from the trustee of the IRA directly to the charity. This way, it doesn’t show up as taxable income and helps prevent the distribution from being taxed in Michigan.
If you have already donated to a public charity in 2020, make sure you received supporting documentation for the donation. If you have yet to donate or have questions, CACF would be happy to help.
Happy Holiday, Doreen