The CARES Act is federal legislation recently passed that provides a new economic stimulus package in response to the novel coronavirus COVID-19 crisis. One section included in the act provides an incentive to help nonprofit organizations. The goal of the incentive is to encourage charitable contributions to financially boost nonprofits struggling during the crisis.
While donors will need to wait until the 2021 tax season to reap the benefit outlined in the CARES Act, churches, ministries, and nonprofit organizations can benefit from cash donations now.
Remind your donors of the new tax incentive available for charitable cash contributions. Here’s what’s new in the CARES Act relating to charitable contributions:
The 60% adjusted gross income limitation for cash charitable contributions is expanded to 100% of adjusted gross income for 2020.
Taxpayers can take up to $300 deduction for cash donations when they file their 2020 taxes in 2021.
The $300 deduction is available only to those who do not itemize. This is known as an “above-the-line” deduction and is an important incentive; only about 13% of taxpayers choose to itemize over the standard deduction.1
The limit on the deductibility of corporate contributions of cash made in 2020 has increased to 25% of net taxable income.
The CARES Act provides many other benefits, such as aid for small employers and nonprofits, recovery rebates to individuals, and more. You can learn more about the CARES Act here.
Brotherhood Mutual also has developed other risk management resources related to the coronavirus pandemic:
1 McClelland, Robert. “Anybody Can Itemize Their Deductions. But Most Don’t Want To.” Tax Policy Center, Urban Institute & Brookings Institution, 5 September 2019. https://www.taxpolicycenter.org/taxvox/anybody-can-itemize-their-deductions-most-dont-want.