The CARES Act is federal legislation recently passed that provides a new economic stimulus package in response to the novel coronavirus COVID-19 crisis.
The act provides new tax incentives available for charitable cash contributions:
- The 60% adjusted gross income limitation for cash charitable contributions is expanded to 100% of adjusted gross income for 2020.
- Taxpayers can take up to $300 deduction for cash donations when they file their 2020 taxes in 2021.
- The $300 deduction is available only to those who do not itemize. This is known as an “above-the-line” deduction.
- The limit on the deductibility of corporate contributions of cash made in 2020 has increased to 25% of net taxable income.
- On December 27, 2020, the U.S. Government enacted a new stimulus package that extended many of the charitable giving provisions of the original CARES Act for 2021.
Check with your tax professional to see if you can take advantage of the new incentives.