Congress Makes Charitable Giving Easier During the COVID-19 Crisis
To encourage charitable contributions to deserving qualified charities during these trying times, Congress has relaxed some of its restrictions related to how much a taxpayer can deduct as a charitable contribution in any given year.
Under normal circumstances, cash contributions are limited to 60% of a taxpayer’s adjusted gross income (AGI). However, as has happened in the aftermath of prior disasters such as 2017 hurricanes Harvey, Irma and Maria, the CARES Act has increased the AGI limit to 100% for 2020. Any amount in excess of 100% can be carried over and deducted on subsequent years’ returns until the excess is used up or until five years have passed, whichever happens first.
The CARES Act also created an above-the-line charitable contribution for taxpayers who don’t itemize their deductions. This will allow for a charitable deduction for cash contributions to qualified charities of up to $300 made in 2020.
While generally, the increased charitable contribution limitations related to natural disasters have applied only to contributions to relief efforts specific to the disaster, the only requirement for the CARES Act provisions is that the donations be in cash.
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