Charitable Giving in 2020 – There’s Still Time to Give Back
Israel Tannenbaum
Partner, CPA
Nov 10, 2020
There’s never been a better time to show how much you CARE(S): Maximizing your Charitable Contribution Deduction
If there’s one thing 2020 has shown us, it’s that tragedies can occur at any time. These unprecedented times have made it more critical than ever for Not-For-Profit institutions to ramp-up their activities and programs to support those in need. Simultaneously, our economy is facing never before seen challenges, which have severely limited funding sources for these organizations; just when they need it most!
Fortunately, a key provision of this year’s COVID relief legislation provides an extremely attractive incentive to support charitable organizations.
For individuals who itemize, consider making additional charitable contributions through December 31, 2020, because the CARES Act lifts the existing cap on cash contributions, raising it from 60 percent of adjusted gross income (“AGI”) to 100 percent through the end of 2020. It raises the annual limit from 10 percent to 25 percent of the corporation’s taxable income for corporations.
For example, consider an individual who has $10 million of AGI and makes a $10 million cash contribution to a public charity in 2020. Previously, the income tax deduction was limited to $6,000,000. For donations made in 2020, new legislation enacted this past March (the CARES Act) allows a charitable contribution deduction for the full $10 million. Note the higher AGI limit applies only to contributions made directly to public charities and not to other charitable entities such as donor-advised funds, supporting organizations, or private foundations.
With proper planning, there is still time left in 2020 to take advantage of this benefit. There has never been a better time to give.
For questions or further information, contact a member of our Tax Services Team.
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