Redpath Insights

CARES Act Charitable Contributions

The CARES Act and Charitable Contributions

by Ashley Rehn, CPA

May 7, 2020 - The CARES Act that President Trump signed into law on March 27, 2020, contained significant provisions related to charitable deductions, providing many individuals and corporate donors with greater flexibility.

New $300 deduction for qualified charitable donations

 Individuals will be able to claim a $300 above-the-line deduction for cash contributions made to qualified charitable organizations in 2020. This deduction is available to taxpayers who claim the standard deduction, broadening the pool of individual taxpayers who can receive a tax benefit for charitable contributions.

60% of AGI limit for individuals increased to 100% for 2020

 Individuals who itemize can deduct cash contributions to qualified charitable organizations of up to 100% of their adjusted gross income (AGI) for the 2020 tax yearโ€”these deductions were previously limited to 60% of their AGI.

10% taxable income limit for corporations increased to 25% for 2020

Corporations can deduct cash contributions to qualified charitable organizations of up to 25% of their taxable income for the 2020 tax yearโ€”these deductions were previously limited to 10% of the taxpayerโ€™s taxable income.

These cash contributions must be made to public charities. You can verify the status of all nonprofit organizations using the IRS Tax Exempt Organization Search.

Cash contributions do not need to be specifically for COVID-19 related activities to fall under the guidelines outlined above. Contributions to new or existing donor-advised funds, or to private non-operating foundations do not qualify for either the above-the-line deduction or the 100% of AGI limitation.

COVID-19 CARES Act

Ashley Rehn, CPA

Ashley Rehn, CPA

Ashley Rehn is a senior tax manager and is the tax-exempt service area leader. She provides tax compliance and consulting services for a variety of exempt organizations including charities, foundations, charter schools, member organizations, business leagues, civic organizations, and social clubs. Ashley assists clients with tax planning, form 990 series preparation, and research. Specific areas of expertise include unrelated business income, private foundation compliance and excise tax reporting, entity structuring (including multiple entities and joint ventures), monitoring and analysis of public charity status, and board education. Ashley is a holder of the Not-For-Profit Certificate I issued by the AICPA. The Not-for-Profit Certificate I offers a comprehensive, foundational overview of a non-profitโ€™s unique financial needs. Certificate holders learn to recognize applicable GAAP reporting standards, identify state and federal filing requirements, understand best practices in board governance, risk assessment, and internal controls, and are able to outline the planning steps of a successful audit engagement. She has provided public accounting services at Redpath and Company since 2007.