The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 creates two, temporary changes to federal tax law to encourage charitable donations. As part of CARES, individuals and corporations who itemize their deductions may be able to claim much larger amounts of their charitable contributions. Individual taxpayers may deduct gifts of cash to public charities up to 100% of the taxpayer’s adjusted gross income (up from the previous maximum of 60%). Corporate taxpayers may be able to deduct gifts of cash to public charities up to 25% of their taxable income (up from the previous maximum of 10%). These increases in allowable charitable deductions only apply to cash donations to public charities, not to donations to private foundations or donor advised funds.
CARES also creates a new “above the line” adjustment to income which allows taxpayers who do not itemize to receive a tax benefit from charitable donations. It is estimated that almost 9 out of 10 individual taxpayers do not itemize their federal tax deductions. For 2020 the amount available is up to $300 per taxpayer ($600 for a married couple) in charitable contributions. The amount of the charitable donation, up to the dollar limit, is subtracted from their gross income before calculating the standard deduction and taxes due. It reduces their taxable income without the need to itemize deductions on their federal tax return.
Please remember that you may not take a charitable deduction for your contribution unless the organization is qualified to receive tax-deductible donations. Some organizations, such as political, social, or civic groups, may be tax exempt but you can not deduct contributions to them as charitable donations. The Winn Feline Foundation is a 501(c)(3) public charity. All of your donations to Winn are tax deductible to the fullest extent allowed under federal law.
George J. Eigenhauser Jr. is an attorney at law, licensed in the state of California since 1979. He has served on the Winn Board of Directors and as CFA liaison to Winn for more than 10 years. His expertise in the area of wills, trusts and estate planning allows him to assist donors with planned giving decisions. He is also the legislative coordinator for the Cat Fanciers’ Association, Inc. and has served on the CFA board for 15 years.