Offering

The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) enacted in March 2020 includes an incentive for charitable donations. For 2020 only, taxpayers who do not itemize their deductions may claim a charitable contribution deduction of up to $300 for the taxable year for cash contributions made to a public charity that is not a supporting organization or donor-advised fund. This new provision does not permit an above-the-line deduction for unused charitable contributions carried forward from a prior year.

The CARES Act does not explicitly address whether couples filing a joint return may claim $300 each. We are not likely to have an answer until the instructions for the 2020 Form 1040 are published.

Modification of Charitable Deduction Limit

The CARES Act also expanded the limit on the deductibility of cash contributions made by individuals to a public charity during 2020 from 60% of adjusted gross income to 100% of adjusted gross income. The limit for noncash contributions remains at 30% of adjusted gross income.

The limit on the deductibility of corporate contributions of cash made during 2020 is increased from 10% of net taxable income (before taking into account charitable contributions) to 25%. The limit for noncash contributions made by a corporation remains at 10%.