Tax Benefits of CARES Act
The new CARES (Coronavirus Aid, Relief, and Economic Security) Act is designed to help individuals, businesses, and nonprofits facing economic hardship during the coronavirus pandemic.
The CARES Act temporarily expands charitable giving tax incentives during the economic downturn related to the pandemic to acknowledge the critical function of nonprofits in communities. Please consult your attorney, CPA or financial advisor before December 31, 2020 to find out how these strategies fit your philanthropic goals. These changes may only be available for this calendar year.
Mark Filla, financial advisor and Kathy’s House board of directors vice chair, explains the changes that specifically impact IRA distributions and charitable giving in the video below.
Key Provisions of the CARES Act Impacting Charitable Giving
Universal Deduction for Donations Up to $300
Previously, charitable contributions could only be deducted if taxpayers itemized their deductions. However, taxpayers who don’t itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations, including Kathy’s House. For the over 9 out of 10 people who no longer itemize their charitable giving, the CARES Act will allow these individual taxpayers to deduct donations to charities of up to $300 on their 2020 federal tax return, even though they take the standard deduction.
Raising the Charitable Giving Deduction Cap
For those who itemize their deductions, cash contributions to organizations such as Kathy’s House may be deducted up to 100% of your adjusted gross income for the 2020 calendar year. For those donors who itemize their deductions and therefore directly write off gifts to 501(c)(3) public charities, the current deduction cap is 60% of adjusted gross income. Corporations can deduct charitable donations up to 10% of taxable income.
Changes to IRA Distributions
If you are 70 1/2 years of age or older and have been subjected to Required Minimum Distribution rules in previous years, you are not required to make those distributions in 2020. However, Qualified Charitable Distributions, or QCDs, are still allowed. Under QCD rules you can make a tax-free distribution of up to $100,000 from your IRA directly to a qualified charity like Kathy’s House.
Why Donate to Kathy’s House?
Your support makes a marked difference in the lives of patients and families facing cancer and other serious illness. 40 percent of patient guests said they would not be able to access needed medical care in Milwaukee without Kathy’s House. Our average nightly donation is just $30. The generosity of donors in our community who support Kathy’s House means that the remainder of the $90 per night cost incurred for each room can be fulfilled. Learn more about the impact of Kathy’s House and discover other ways to give to support our mission.