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The CARES Act & Your Charitable Giving in 2020

In March 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act became law to aid Americans during the health crisis brought on by the COVID-19 pandemic. In addition to economic relief to individuals and businesses, the Act also contains provisions that impact charitable giving options for individuals like you with an interest in supporting Richmond Law and our students during these unprecedented times. Key provisions of the new law that may affect your charitable giving decisions are outlined below. Please consult with your financial advisors to ascertain how these opportunities may complement your personal, philanthropic and tax planning objectives.

  • The CARES Act enacted a temporary above-the-line charitable tax deduction for cash donations of $300 per tax return for individuals who do not itemize their returns and claim the standard deduction ($12,400 for singles, $18,650 for head of household, $24,800 for married filing jointly). This universal charitable deduction incentivizes those who do not itemize to continue their charitable giving in 2020.
  • For individuals who itemize, the cap on deductions taken for annual contributions has been lifted from 60% to 100% of Adjusted Gross Income (AGI) for cash gifts to public charities in 2020. This lift may enable you to avoid significant capital gains and income taxes this year and any excess contributions can be carried forward for five (5) years, subject to the 60% AGI limit previously in place. Gifts made to Donor Advised Funds (DAFs) do not qualify for the increased deduction. For corporations, the new law raises the annual limit from 10% to 25% of taxable income.
  • The new law includes a temporary waiver of Required Minimum Distributions (RMDs) for owners of Individual Retirement Accounts (IRAs) aged 72 or older. For individuals who had to take a RMD for tax year 2019 before the April 2020 deadline, that requirement has been waived for the year.
  • Individuals aged 70½ and older can continue to make tax-free charitable gifts directly from their eligible IRAs through Qualified Charitable Disributions (QCDs).

The new law, coupled with current financial uncertainty, has created an opportunity for those concerned about their income from investments. Individuals may wish to consider charitable gift annuities that offer fixed and guaranteed income or other charitable vehicles that offer income streams. We recommend discussing options with professional advisors or contacting Courtney Curry, Assistant Dean for Law Development, at ccurry@richmond.edu or (434) 713-8024 to discuss Gift Planning opportunities.