The U.S. Congress passed the CARES Act as a result of the economic impact of the COVID-19 pandemic. Certain elements of this act help facilitate philanthropic contributions to worthwhile organizations, such as Sacred Heart Greenwich. Some specific provisions of the CARES Act related to charitable giving are referenced below. As always, please consider discussing with your professional tax advisor.
CARES ACT expands tax deductions for Charitable Giving
New Giving Opportunity for Non-Itemizers
- The $300 above-the-line charitable deduction has been extended for single filers who do not itemize deductions.
- For 2021, this above-the-line deduction is increased to $600 for married couples filing jointly who do not itemize tax deductions.
- As in 2020, this deduction applies only to qualified cash contributions and does not apply to cash contributions made to private foundations, donor advised funds or supporting organizations, or to split-interest trusts like charitable remainder and lead trusts. It also does not apply to carry-over contributions.
Extension of the charitable contribution limitation
- The temporary suspension of the 60 percent charitable contribution deduction limitation has been extended into 2021 for qualified cash contributions.
- In 2021, individual taxpayers who itemize tax deductions and who contribute cash to a public charity, or a limited number of private foundations, may deduct up to 100 percent of their adjusted gross income after taking into account other contributions subject to charitable contribution limitations.
- Individual taxpayers can continue to carry forward any excess charitable contributions for five years, but the enhanced 100 percent deduction limitation expires after 2021.
- In 2021, corporations may continue to deduct charitable gifts up to 25 percent of the corporation’s taxable income (increased from 10 percent).