Charitable organizations, like the HMH Foundation, are important during the COVID-19 pandemic. Recognizing the value of charitable organizations to the recovery of our community and the economy, Congress included four charitable giving benefits in the Coronavirus Aid, Relief and Economic Security Act (CARES Act), enacted on March 27, 2020.
1. Universal Charitable Deduction: The CARES Act includes provisions that allow eligible taxpayers a partial above-the-line deduction of up to $300 in gifts made to public charities for tax year 2020. Eligible taxpayers are individuals who do not itemize their deductions, allowing those taxpayers a tax benefit that they would otherwise not receive for supporting nonprofits. The deduction is limited to cash gifts only.
2. Increased Deduction Cap for Individuals: Individuals that make gifts of cash to nonprofits in tax year 2020 are allowed a deduction of up to 100% of their adjusted gross income. This increased deductibility cap applies to cash gifts to both public charities (which was previously limited to 60% of adjusted gross income) and private foundations (which was previously limited to 30% of adjusted gross income). This increase in limitation is for cash gifts only. Gifts in excess of 100% of the taxpayer’s adjusted gross income may be carried forward up to five subsequent tax years.
3. Increased Deduction Cap for Corporations: Similarly, corporations that make gifts of cash to nonprofits in tax year 2020 are allowed a deduction of up to 25% of taxable income (which was previously limited to 10% of taxable income). This increase in limitation is for cash gifts only. Gifts in excess of 25% of the corporate taxpayer’s taxable income may be carried forward up to five subsequent tax years.
4. Increased Deduction Cap for Food Contributions: In order to encourage companies to donate food to charitable organizations that feed individuals in need, corporations that donate food inventory are now able to deduct up to 25% of business net income for the taxable year (which was previously limited to 10% of business net income).
If you have specific questions, please consult your attorney, financial planner or accountant. As you are able and willing, please consider the HMH Foundation for your charitable giving in 2020.
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