The CARES Act significantly loosened some of the rules governing charitable deductions for the tax year 2020. Here are some highlights:
- Individuals will be able to claim a $300 above-the-line deduction for cash contributions made, generally, to public charities in 2020. This rule effectively allows a limited charitable deduction to taxpayers claiming the standard deduction. (This is not allowed for taxpayers who itemize deductions.)
- The limitation on charitable deductions for individuals (generally 60% of modified adjusted gross income) doesn’t apply to cash contributions made, generally, to public charities in 2020. Instead, an individual’s qualifying contributions, reduced by other contributions, can be as much as 100% of the contribution base.
- Similarly, the limitation on charitable deductions for corporations (generally 10% of modified taxable income) doesn’t apply to qualifying contributions made in 2020. Instead, a corporation’s qualifying contributions, reduced by other contributions, can be as much as 25% of modified taxable income.
No connection between charitable contributions and COVID-19 activities is required. Please contact your CPA with any questions you may have.
