The CARES Act: Great News for Taxpayers and Charitable Donations
Our world has been turned upside down in 2020. The spread of COVID-19 has brought about feelings of fear, worry and uncertainty throughout the world—especially in those who are immunocompromised, like our precious Rally Kids. These children and their parents already know what it’s like to live in fear of getting sick. Sanitizing every surface, homeschooling, wearing gloves and masks in public, and next-level hand-washing are just a handful of the precautions these kids take on a regular basis. Now, we must all do the same to protect not only our Rally Kids but other at-risk populations as well.
Despite the unknowns that lie ahead, we received a bit of good news on Friday, March 27 when it was announced that the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed by President Trump.
For nonprofits, the $2 trillion economic stimulus package will help incentivize charitable giving by making 100% of cash donations deductible for those who itemize, along with other new provisions that benefit both taxpayers and charitable organizations.
Here’s what you need to know.
The CARES Act Incentivizes Charitable Giving
As part of the stimulus package, nonprofits with 500 or fewer employees are eligible for paycheck protection program loans in order to cover things like payroll and operations. While there are a few other provisions designed to help nonprofits stay operational, there are also some notable new deductions designed to incentivize charitable giving. These are outlined below.
Great News for Those Who Itemize
If you itemize, this year 100% of your cash donations (which includes payments like checks and credit cards) are deductible. CARES lifts the existing cap on annual contributions for those who itemize, raising it from 60 percent of adjusted gross income to 100 percent for most donors. It’s noted that this applies only to donations given to a public nonprofit. For private foundations, the previous deduction rules apply.
Great News Even if You Don’t Itemize
A new deduction has been added for total charitable contributions of up to $300 per taxpayer. The incentive applies to cash contributions made in 2020 and can be claimed on next year’s tax forms. This is especially beneficial to those who typically take the standard deduction (as opposed to itemizing) when filing taxes. To qualify for this deduction, you simply have to make a donation to a qualified charity up to $300.
Required Minimum Distributions Waived
Required minimum distributions for accounts like IRAs that would start in 2020 have been pushed to 2021. While this doesn’t change much for nonprofits, it still allows donors to make tax-compliant qualified charitable distributions up to $100K from these accounts.
Ultimately, the CARES Act is a positive thing for both taxpayers and nonprofits. Taxpayers can feel good about giving back thanks to these new provisions, and as a nonprofit, we’ll continue to put your donations to good use by funding our critical mission of raising awareness and supporting the best and most promising childhood cancer research. If you’d like to support Rally during this time, you can make a tax-deductible donation by clicking the button below. We thank you, sincerely, for your ongoing support during this time and always. Stay safe, stay healthy, and Rally On!