Covid-19 and CARES Act

Many not-for-profit organizations have seen their spring fundraising events being canceled. And with these events accounting up to 80% of their donation budget, the budget for the next fiscal year is looking quite gloomy.

Now is a great time to put on a spring donation drive in its stead. take into consideration the two new tax benefits for donors to nonprofits that the Coronavirus Aid, Relief, and Economic Security (CARES) Act created.

First tax benefit is that up to $300 for individual/$600 for married donors charitable deduction is available even if the taxpayers do not itemize on their federal income tax returns with caveats. Second tax benefit is for taxpayers who itemize and businesses. For taxpayers, the 60% of AGI limit for charitable gifts are eliminated and can fully deduct the gifts up to 100% of AGI. For businesses, the charitable contribution limit is increased from 10% to 25% of a corporation’s taxable income.

Both tax benefits come with caveats. The deduction only applies to cash contributions made directly to public charities and certain foundations. Excluded are gifts to donor-advised funds.