Expanded Deductions for Charitable Giving Due to CARES Act

In response to COVID-19, and in an effort to encourage more charitable giving in 2020, the recently enacted government stimulus bill (the “CARES Act”) provides some additional tax relief for donors. Hopefully, this makes it easier to give and save at the same time.

$300 Above-the-line Charitable Deduction for Those Who Take a Standard Deduction

For those taking the standard deduction on their 2020 tax return, they can claim a brand new “above-the-line” deduction of up to $300 for cash donations made to charity this year (2020.) Donations to donor advised funds and certain organizations that support charities are not deductible.

60% of AGI Limit Waived for Those Who Itemize

People who itemize on Schedule A of their tax return, have been able to claim a deduction for charitable donations. However, the deduction amount was generally limited to 60% of their adjusted gross income (AGI).

The CARES Act lifts the 60% of AGI limit for cash donations made in 2020 (although there is a limit of a 100% of AGI on charitable contributions). That means itemizers can deduct more of their charitable cash contributions this year, which will hopefully boost charitable giving. As with the new above-the-line deduction, donations to donor advised funds and supporting organizations don’t count.

Please contact your HW&Co. advisor with any questions you may have regarding this.