During our current time and in this pandemic crisis, Americans seem to always arise to the occasion, helping one another in times of difficulty in different ways and forms. The government realizes this and wants to do its part by allowing taxpayers more of a benefit in the way of creating the incentive to donate. The CARES Act has included some temporary new rules for this current year to reward those who donate which in turn helps others.

Here are some of the important facts about the Act:

  • Any individual who does not elect to itemize his/her deductions on his/her tax return can take a $300 deduction for contributions made to qualified charitable organizations.  It is important to note that non-operating foundations and donor advised funds, do not qualify as qualified charitable organizations.
  • Current year rules allow a deduction for donations up to 60% of the taxpayer’s adjusted gross income. Any additional amounts are carried forward to the next five succeeding years.  The CARES act temporarily suspends this AGI limitation for qualifying cash contributions.
  • For Corporations, the CARES Act temporarily increases the limitation on the deductibility of cash contributions during 2020 from 10% to 25% of the corporation’s taxable income.
  • The Cares Act also increases the limitation on deductions for contributions of food inventory from 15% to 25%.

Questions and Answers

Q:  Can a taxpayer donate cash to qualified organizations first using the $300 above the line and then deducting the rest as an itemized deduction?

No. The $300 deduction is meant to be an addition to the standard deduction for people who do not itemize. Taxpayers who itemize their deductions must enter 100% of their donations on Schedule A

Q: Are my deductions for charitable contributions still limited under the CARES Act?

Yes. But now the deduction is limited to 100% of the taxpayers AGI and any excess can be carried forward.