We hope you and your families are safe and well.
Fidelco Guide Dog Foundation is now over six weeks into operating remotely. Puppies are being born, lovingly raised by volunteers, and formally trained by our staff as they prepare to be matched with clients when it’s safe to do so. Our mission continues, thanks to hardworking staff, dedicated volunteers, and the ongoing support of our donors.
We wanted to provide you with information on the newly enacted “CARES Act” which went into effect on March 27, 2020. The Bipartisan Proposal for Coronavirus Aid, Relief and Economic Security Act known as the “CARES Act” was designed to relieve some of the economic stress caused by the Coronavirus.
Some highlights regarding the charitable opportunities provided by the CARES Act include:
Individuals who do not itemize their deductions can take up to $300 in charitable contributions.
Required minimum distributions are suspended for 2020.
Donors can contribute up to $100,000 via a qualified charitable distribution.
The 60% adjusted gross income (AGI) limit on deductions for cash charitable contributions is suspended, permitting charitable deductions for up to 100% of 2020 adjusted gross income, based on some limitations.
The following provides more detailed information on the CARES Act:
For tax year 2020, the CARES Act allows individuals who do not itemize their deductions (a deduction made to calculate adjusted gross income) to take an above the line deduction for up to $300 in charitable contributions.
Also, for 2020, the CARES Act suspends the current 60% adjusted gross income (AGI) limit on deductions for cash charitable contributions for those individuals that do itemize deductions. (although there is still a 100% of AGI limit on all charitable contributions). For example, if an individual who itemizes deductions is so inclined, the individual can take a charitable deduction for up to 100% of their 2020 adjusted gross income, subject to some limitations.
The second aspect of the Cares Act is the suspension of RMDs (required minimum distributions) from retirement accounts. This could be beneficial to seniors, as the distribution for 2020 would be based on the account balance at year end 2019 which would likely be higher than today’s account balance. Although RMDs are waived for 2020, a donor is still able to contribute up to $100,000 of their IRA to charity via the qualified charitable distribution, or (QCD). It is important to note that you do not need to be age 72 to take advantage of the QCD as the SECURE Act, which was signed into law in late 2019, and allows individuals who are at least age 70.5 to take advantage of the QCD. This may be advantageous to seniors who are charitably inclined. The qualified charitable deduction taken in 2020 would reduce the remaining overall IRA balance and allow the donor to contribute pretax dollars to charity. This may be beneficial for those who want to lower the balance of their IRA and possibly future RMD distributions which would be subject to tax. The qualified charitable deduction must be to a qualified charity and not a donor advised fund.
IRS CIRCULAR 230 DISCLOSURE: Although this written communication may address certain tax issues, it is not a reliance opinion as described in IRS Circular 230 and, therefore, it cannot be relied upon by itself to avoid any tax penalties, or to market any entity, investment plan or arrangement. Please check with your tax professional as to your individual situation.