What does the CARES act allow regarding charitable contributions?

Answer 1

The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) allows for several provisions regarding charitable contributions. Some of the key features include:

1. Universal Charitable Deduction: The Act introduces a new above-the-line deduction of up to $300 for individuals who take the standard deduction. This means that even if you do not itemize your deductions, you can claim this deduction on your 2020 tax return.

2. Increased Limit for Itemized Deductions: For those who itemize their deductions, the Act lifts the existing limits on charitable contributions, allowing individuals to deduct up to 100% of their adjusted gross income (AGI) for cash donations made to certain qualified charitable organizations in 2020. Normally, the limit is 60% of AGI.

3. Corporate Charitable Contributions: The limit on corporate deductions for charitable contributions has also been increased. Corporations can now deduct up to 25% of their taxable income for cash donations made to qualified charitable organizations in 2020 (up from the previous limit of 10% of taxable income).

These provisions aim to encourage charitable giving during the COVID-19 pandemic by providing tax benefits to individuals and corporations who make contributions to qualified charitable organizations.