CARES Act Donor Benefits
WRITE OFF $300!
HERE’S HOW:
The Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law to encourage givers like you to support the communities you care about. Expanding the charitable giving incentive is a recognition by Congress of the critical work of agencies like Thornwell who provide essential services to thousands of children and families.
IMPORTANT BENEFITS FOR YOU AS A DONOR:
With our communities and neighbors in crisis, we ask you to consider the CARES’ incentives below and make a much-needed gift.
Thornwell’s Everyday Needs campaign ensures that children at risk of, or experiencing foster care now, receive the critical support they need today.
IF YOU DO NOT ITEMIZE DEDUCTIONS:
The Act allows an above-the-line deduction for cash contributions of up to $300. Even if you claim the standard deduction in 2020, in addition you can write-off up to $300 in charitable giving.
IF YOU ITEMIZE DEDUCTIONS:
The Act has increased deductible income limits for cash contributions by individual and corporate donors. Individuals can deduct up to 100% of their adjusted gross income (AGI) in 2020. Corporations can deduct up to 25% of their taxable income. These temporary 2020 increases raise the limits from 60% and 10%, respectively. These simple changes are for cash contributions in 2020 only. Contributions to donor advised funds and supporting organizations do not qualify. Existing carryover rules of five years still apply for contributions over deductible income limits.
IRA CHARITABLE CONTRIBUTIONS:
The change to 100% of AGI opens the door for those over 59 ½ years old to make charitable contributions using IRA funds. Currently, for most, it only makes sense to use an IRA for charitable giving if you are over 70 ½ by leveraging a Qualified Charitable Distribution (QCD). A QCD allows those over 70 ½ to make a direct gift of up to $100,000 annually from an IRA to a public charity without incurring tax.
Gifts from IRAs other than QCDs are generally not feasible because any withdrawal from your IRA is taxable as income in the year of withdrawal. Since you can only deduct 60% of your AGI in any one year, taking money from your IRA to give to charity can result in a tax bill.
However, with 100% of your AGI deductible in 2020, you can take a cash distribution from your IRA, contribute it to charity, and you may completely offset the tax attributable to the distribution with a deduction. You must be over 59 ½ to remove money from an IRA without a 10% early withdrawal penalty.
GIVING APPRECIATED PROPERTY:
Even with the 100% AGI deductibility limit, it still might make more tax sense for a donor to give appreciated property to avoid the capital gains tax on that property. CARES offer no relief in this area, however, it is worth remembering that existing law allows you to deduct up to 30% of AGI when you give appreciated securities to a donor advised fund and you can carryover amounts in excess of the 30% for five years.
If giving appreciated property is what makes the most sense for you, act quickly to establish a donor advised fund, make the contribution and Thornwell will work aggressively to liquidate the property and get your gifts into the community at this most pivotal of times.
WE ARE GRATEFUL FOR YOUR CARING HEART AND SPIRIT!
We simply could not help hurting children and families without you!
As our national emergency pulls our community apart via social distancing measures, it also pulls us together as we rally around our friends, family and loved ones to offer our support in these crucial days. If you are in a financial position to help our community, please contact Jill Gibson, Vice President for Mission Advancement, to discuss how to best leverage new and existing tax laws that will serve to multiply the impact of your giving.
See more about Thornwell’s COVID Response and Community Resources here.
Jill Gibson
jill.gibson@thornwell.org
864.938.2739