CARES Act Encourages Charitable Giving

CARES Act Encourages Charitable Giving Image

We are living through an incredibly challenging time. From workers that are being laid off to parents that are trying to manage with children at home, the impact that the coronavirus pandemic is having is widespread and heartwrenching.

At the end of March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which seeks to help millions of Americans survive this economic and health crisis. However, nonprofits are also sorely in need of help right now, as they experience an increased demand for their services but are seeing fewer regular donations and have canceled fundraising events. To address this need, the CARES Act includes a provision to encourage charitable giving during this difficult time.

The bill includes a temporary “above the line,” or universal charitable deduction, to enable all Americans to give up to $300 to charities, tax-free, through the end of 2020. Here is what you need to know:

  • This deduction is only eligible for taxpayers who do not itemize their taxes. To put it another way, this temporary deduction is only for filers who claim the standard deduction. 
  • The deduction covers cash donations. Stock, in-kind, or donor-advised funds are not included.
  • This deduction is only for donations made during the calendar year 2020. It cannot be claimed for donations made during 2019.
  • The $300 does not need to be donated in one lump sum. This gives donors the opportunity to spread their gift across multiple organizations.
  • The deduction can only be claimed for donations given to IRS-qualified organizations. Some examples of donations that are not tax-deductible include donations given to crowdfunding websites or to a political campaign.
  • Taxpayers who currently itemize their taxes are still eligible for the existing charitable deduction. 

While currently, this deduction is only temporary for donations made in the calendar year 2020, we will continue to advocate for it to be made permanent. In addition, we will strongly encourage Congress to increase the amount of the deduction.