May 29, 2020

2020: A Year for Charitable Deductions

By Dina Fanous, Staff Accountant, Tax & Business Services

2020: A Year for Charitable Deductions Nonprofit & Social Sector

One provision of the CARES Act expanded charitable deductions in 2020 to benefit most filers.

Let’s start with the exclusive charitable deductions for non-itemizers in 2020. The CARES Act allows taxpayers eligible for the standard deduction to deduct up to $300 for cash contributions made to qualified charitable organizations (also referred to as 501(c)(3) public charities). This $300 deduction for non-itemizers will be treated as an “above-the-line” deduction resulting in a lower adjusted gross income (AGI) and tax liability. Note that the $300 contribution limit does not apply to donor-advised funds.

The CARES Act also established new contribution limits for filers who itemize deductions. In 2020, the limitation on charitable deductions for taxpayers who itemize will increase from 60% of AGI to 100% of AGI. Any excess will be carried forward to be utilized over the next five years.

The CARES Act’s expansion of charitable deductions also considers businesses. In 2020, corporations are entitled to increase deductions for cash contributions to public charitable organizations to 25% of taxable income (versus 10% previously). Corporate taxpayers can also carry forward and utilize any access amount over the next five years. Additionally, the limit on deductions for food contributions increased from 15% to 25% of a corporation’s taxable income.

If you have any questions, please contact your Marcum Tax Professional.

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