CARES Act (as of 10.13.2020)
By Laura Malone
Since I joined the Community Foundation of Lorain County in September, I have been amazed by the generosity displayed in our community. The support of our local non-profits during Connect to a Cause and the impact made with our Lorain County Cares COVID-19 Response Fund has indeed embodied Community Foundation’s motto of connecting people who care with causes that matter. While caring is always the first impulse in giving, did you know that there may be unique tax benefits created by the CARES Act legislation? The law passed earlier this year to provide pandemic relief includes several charitable tax provisions to encourage charitable giving. No matter what amount you typically give, here is what you need to know:
- If you take the standard deduction on your 2020 tax return (the one that you’ll file in 2021), you can claim a brand new “above-the-line” deduction of up to $300 for the cash donations you make this year. Married-filing-jointly taxpayers will get an above-the-line deduction of up to $600. This can be an easy way to support the endowment fund of one of your favorite charities at the Community Foundation (peoplewhocare.org/funds).
- If you itemize on Schedule A of your tax return, your charitable cash deductions generally limited to 60% of your adjusted gross income (AGI) are now limited to 100% of AGI for this year. If you are looking to rebalance your investment portfolio, it may be advantageous to sell some stock and make a charitable cash gift. Not only will this gift minimize your capital gains tax exposure, but the cash can also be used to support one of Community Foundation’s many scholarship funds.
- The required minimum distribution (RMD) is waived for IRA and other qualified retirement plan owners for 2020. However, if you are over age 70½, you can still make a qualified charitable distribution of up to $100,000 from your IRAs. Since many people have much more invested in their IRAs than in their checking and savings accounts, this can be a great way to create your lasting legacy to support Lorain County.
- For business owners, charitable deductions for corporations were lifted from 10% to 25% of taxable income. Local community leaders can use this additional benefit to support broader community efforts like Community Foundation’s Racial Equity Fund or Lorain County Cares COVID-19 Response Fund.
Even though some of the new tax incentives around giving exclude the use of donor advised funds, many giving opportunities through the Community Foundation of Lorain County are still eligible for these benefits. When combined with others in Lorain County, even a small donation will have a positive and lasting impact. Your charitable giving makes a world of difference to the causes that matter to you. Connect with me to discuss how we can fulfill your 2020 giving plans.