It is an understatement to say these are difficult times. Many Americans are losing their jobs, schools that are often a source of daily meals for children are closed, and stay home mandates are making it even more difficult for those who rely on the support of our nation’s charities to get the help they need.
The CARES Act made significant changes to the contribution limits of Internal Revenue Code (IRC) Section 170, presumably to encourage charitable giving during this time of great need.
At the election of the taxpayer, qualified contributions made during the calendar year 2020 are no longer subject to the 60% of adjusted gross income (AGI) limit. The deduction may be allowed up to 100% of the taxpayer’s AGI, with any excess available for carryover for five years subject to the 60% AGI limitation.
In addition, for taxable years beginning in 2020 an eligible individual may deduct up to $300 of cash contributions even if they don’t itemize.
The contribution limit has been increased from 10% to 25% of the corporation’s taxable income as historically determined under IRC Section 170(b)(2), with any excess available for carryover for five years.
Qualifying contributions are those made in cash (and certain food items) during the calendar year 2020 to the following types of organizations:
Qualifying contributions do not include payments to organizations described in the tax code as supporting organizations, donor advised funds and private foundations.
The tax code long provided for an enhanced deduction for taxpayers contributing “apparently wholesome food” out of their own inventory. The limitation for this type of contribution has been increased from 15% to 25% for donations made during 2020.
Contact Cathy Lorenz at email@example.com or a member of your service team to discuss this topic further.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.
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