CARES Act for Individuals- Charitable Considerations

TPC planning and Tax teams

On Friday, March 27th President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law.

This legislation is being billed as the largest aid and relief act in the history of the United States, and is designed to support individuals and businesses as we all weather this Coronavirus 19 (CV19) storm.

Included in the CARES Act are some changes to charitable giving in 2020.  These are likely to have a minor impact on your charitable planning for 2020, but it’s worth noting.

  • Qualified Charitable Contributions (QCCs)
    • A new, “above the line” charitable deduction has been created for 2020.
      • This deduction is limited to $300 gifted to a bona fide 501c3 organization
        • Donor Advised Funds and 509a3 supporting organizations do NOT qualify.
      • This contribution must be made in cash (not appreciated assets).
      • Because this deduction is available “above the line”, it is available to those taxpayers who use the standard deduction. (but not to those who itemize, who would capture the giving within their schedule A deductions)
    • This should not be confused with existing Qualified Charitable Distributions (QCDs) often used by those with Required Minimum Distributions (RMD).
      • QCDs are still available for 2020, but with RMDs suspended for this year you should consult with your advisor about their use.
  • In addition to QCCs, the IRS has relaxed some existing rules that pertain to charitable giving:
      • The Adjusted Gross Income (AGI) limit(s) for the deduction of charitable contributions have been temporarily repealed for 2020.
        • This increases the AGI limit from 60% to 100% for this year.
        • This applies only to “cash” contributions.
        • The charitable gifts must go directly to a 501c3 organization (not a donor advised fund or 509a3 supporting organization).
      • Any excess contributions from 2020 can be carried forward for up to 5 years.

We’re living in volatile times, and we’re ready to work with you to find the right path forward with respect to your 2020 charitable giving plan.  Please contact us with any questions you may have!

The Planning Center is a fee-only financial planning and wealth management firm. 

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