The CARES (Coronavirus Aid, Relief and Economic Security) Act, signed into law on March 27, 2020, provides economic relief to businesses and individuals affected by the COVID-19 pandemic. If you are considering making charitable donations in tax year 2020, we’ve outlined some important provisions of the law (H.R. 748-55 to 748-66) that may benefit you. The specific provisions of the CARES Act related to charitable giving are referenced by page and section of the bill, for your convenience. Before acting on any of the provisions highlighted here, please consider discussing them with your professional advisors to determine their applicability to your individual tax situation.
$300 Charitable Deduction for All
Even if you do not itemize deductions on your taxes, your gift can reduce your 2020 taxable income by up to $300 ($600 for couples). This is a special benefit for 2020 to encourage giving to causes that are impacted by the COVID-19 crisis. (H.R. 748-65; Sec. 2204)
Economic Impact Payment
If you filed 2018 or 2019 taxes or don’t earn enough to file but receive Social Security payments and earned less than $99,000 (single filers), $136,500 for heads of household, or $198,000 for married filers, you may be eligible for an economic impact payment. If your situation allows, consider taking advantage of the $300 charitable deduction by making a gift to UNH’s Student Emergency Assistance Fund or any other fund of your choice from this payment. (H.R. 748-55; Sec. 2201)
100% Deduction Allowance for Cash Gifts to Charities
For the 2020 tax year only, individuals may deduct cash gifts up to 100% of their adjusted gross income (AGI) compared to the typical 60% allowance. (H.R. 748-65; Sec. 2205)
IRA Distributions for Donors Age 70½ or Older
Though the required minimum distribution (RMD) is temporarily suspended for 2020, gifts from an IRA rollover or qualified charitable distribution (QCD) will continue to reduce your taxable income (up to $100,000), especially if you do not itemize your deductions. Click here to access UNH’s QCD Tool. (H.R. 748-63; Sec. 2203)
Cash Contribution Limit from Corporations Increased to 25% in 2020
The taxable income limit that applies to cash contributions made by corporations is increased from 10% to 25% for 2020. The usual 10% limit still applies to other charitable contributions by corporations, and those contributions reduce the 25% limit dollar-for-dollar. Qualified cash contributions in excess of the 25% limit can be carried forward for up to five5 years under the usual limits.
Due to the outpouring of offers of support from UNH alumni and friends around the world, the university has established Student Emergency Assistance Fund to help students through this difficult time. Gifts can be made directly to this fund here.