In response to the nation’s health crisis, the Coronavirus Aid Relief and Economic Security Act—or CARES Act—became law in March of 2020. While most of the act focuses on relief to individuals and businesses, there are key provisions that impact charitable giving. Below is a brief summary.
A reduction in taxable income is now available for individuals who take the standard deduction rather than itemize their deductions. This inclusion creates a new above-the-line charitable deduction for cash contributions of up to $300 and may encourage donors who previously did not receive a tax benefit to continue their charitable giving. The adjustment does not apply to gifts made to a Donor Advised Fund.
For 2020 only, individuals who itemize may deduct annual contributions up to 100% of their adjusted gross income for cash gifts made to nonprofits. This adjustment may be attractive to donors who wish to make a large cash donation. Gifts made to a Donor Advised Fund do not qualify for the increased deduction.
The CARES Act temporarily waives required minimum distributions from most qualified retirement plans, including IRAs, allowing time for these funds to recover from market fluctuations. Individuals age 70 ½ and older can continue to make tax-free gifts up to $100,000 annually from their eligible IRAs through qualified charitable distributions directly to Johns Hopkins.
The CARES Act increased the cash contribution limit for corporations from 10% to 25% in 2020. Charitable contributions in excess of 25% may be deducted for up to five years under the usual limits. The limitation for deductions of contributions of food inventory by a corporation also increased from 15% to 25%.
If you are interested in giving to Johns Hopkins during this unprecedented time, please consult your financial advisor. Contact the Office of Gift Planning if you have additional questions or if we can help you with gift-planning opportunities.