TAX-WISE GIVING

CARES Act Increases Deductions for Charitable Contributions in 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides significant tax incentives to stimulate increased charitable giving this year. Here's how:

  • Charitable gifts up to $300 are now 100% deductible. Previously, you could only use the charitable giving deduction if you itemized your deductions. Now, the CARES Act allows you to deduct up to $300 in donations, whether you itemize or not.

  • The deduction for contributions over $300 has been raised to 100% of your Adjusted Gross Income. Under the CARES Act, donors can get a federal income tax deduction for charitable contributions of up to 100% of their Adjusted Gross Income (AGI) for 2020, replacing the previous 60% of AGI charitable contribution limit. Charitable contributions in excess of this amount can be carried forward for five years subject to the 60% of AGI limit in those years.

DONATING  AN  IRA DISTRIBUTION

A Qualified Charitable Distribution (QCD) allows an individual to make a donation directly from a traditional or Roth IRA to a qualified charity like Park View Community Mission. This is especially attractive because the QCD can be used to satisfy required minimum distributions (RMDs) from an IRA without having the distribution included in your income.

Eligibility

A qualified charitable distribution may be made:

  • When the IRA holder is age 70 1/2 or over

  • Directly from the IRA to a qualified charity.

  • From a traditional or Roth IRA

Limitations on Distributions

Restrictions set on QCDs include the following:

  • $100,000 maximum per person per year

  • Distributions transferred to the charity no later than December 31 of the current tax year

  • Must be a direct IRA distribution from the IRA custodian or trustee to a qualified charity

  • Not all charitable organizations qualify (but Park View does)

  • Applicable only for traditional and Roth IRA distributions (excludes SEP and SIMPLE IRAs)

Making a QCD provides an opportunity to make a charitable contribution that you might otherwise not have been able to make and/or receive potential tax benefits for charitable contributions that you are already making. You should consult your tax advisor and estate-planning attorney about your situation.

Park View Community Mission does not provide tax or legal advice.

Key Benefits

  • For those who give larger gifts - Deductibility limits do not apply to QCDs, which means the QCD can be made in addition to other charitable contributions that may be limited by the annual maximum deductible percentage of income or phase-outs of itemized deductions

  • For those who don't itemize deductions - If QCDs are used as the funding source for charitable donations, the donor will receive tax benefits when there otherwise would have been none due to the use of the standard deduction.

  • For those who pay taxes on a portion of their Social Security benefits - Income for determining the taxation of Social Security benefits is lower than if the IRA holder had taken the RMD, potentially reducting this taxation.

For more information, please call our office at 434-845-8468, extension 100

©2020  Park View Community Mission, 2420 Memorial Ave., Lynchburg VA 24501  (434) 845-8468

Park View Community Mission is a 501 (c) (3) non-profit organization, an equal opportunity provider and employer.