Coronavirus Aid, Relief and Economic Security (CARES) Act

On March 27, 202 the President signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act to help combat the far-reaching impacts of COVID-19. The bill provides increased tax incentives for charitable giving for both individuals and corporations, signifying an intent to stimulate philanthropy throughout America.

In a nutshell, there are many provisions that benefit nonprofit sub-sectors, such as hospitals, education, the arts, and transit systems. The Act includes loan relief, payroll-related benefits, and a charitable contribution deduction incentive for individual and corporate donors. Explore some of these Act highlights, then consult your financial/tax advisor for specific applications to your organization.

The CARES Act provides incentives for charitable giving.

Individual taxpayers who choose the standard deduction can now deduct up to $300 of cash contributions made in taxable years beginning in 2020 to qualifying charitable organizations. A “qualifying charitable organization” includes all charitable organizations to which donations are normally deductible.

Your business can support nonprofits dealing with COVID-19 and get a benefit. The CARES Act increases the amount corporations can contribute to “qualified contributions” from 10% to 25% of taxable income, less the amount of all other charitable contributions allowed under section 170(b)(1) of the Code, with a similar five year carry over allowance for excess contributions. The limit on food inventory contributions by corporations under section 170(e)(3)(C) of the Code is increased from 15% to 25%.

You can’t donate money to your donor advised fund and still get tax credit.
Donor advised funds are excluded.

The window for taking advantage of these changes closes on December 31, 2020.

*Please consult with your tax adviser to determine how the credit will affect you personally.

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