What Does the new CARES Act Provisions Mean for Donors
On December 27, the U.S. Government enacted a second stimulus package in response to the COVID-19 pandemic. The new stimulus package extends many of the charitable giving provisions outlined in the original Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law in late March of 2020. We want to use this opportunity to update our donors on provisions that are relevant to charitable deductions.
For those who don’t itemize their deductions:
- Congress extended the provision for charitable deductions for the tax year 2021, allowing single people to deduct up to $300 and couples to deduct up to $600 in charitable gifts even if they don’t itemize. This means you don’t have to itemize deductions in order to claim the $300 (or $600) as a deduction. Qualifying donations must be made in cash or cash equivalents. This provision excludes gifts into donor-advised funds, private foundations, and 509(a)(3) supporting organizations.
For those who itemize their deductions:
- The bill also extends for one year the previous stimulus law’s increased limits on deductible charitable contributions for individuals who itemize and for corporations. For those individuals, the cap will remain at 100 percent of adjusted gross income. Donors who itemize their deductions can now give more cash to charity before reaching their adjusted gross income (AGI) limitation. The limitation for cash contributions to certain public charities is now 100% of an individual’s AGI for 2021. Any giving beyond this 100% limitation may be carried over and used in the next five years. This provision excludes gifts into donor-advised funds, private foundations, and 509(a)(3) supporting organizations as well.
This means that TPF DAF donors who exhaust the 60% limit with cash contributions to their DAFs in 2021 could make any additional donations outside their DAF (for example to TPF’s other campaigns) and have those donations qualify for a deduction (up until reaching the 100% limit). Please consult a tax advisor to discuss your specific circumstances.
- For corporate charitable giving, the annual limit will stay at 25 percent of taxable income in 2021 instead of reverting to 10 percent. The cap on deductibility of food donations from corporations will stay at 25 percent of taxable income instead of reverting to 15 percent.