Enhanced Benefits from your Generosity in 2020

The CARES Act—the Coronavirus Aid, Relief, and Economic Security Act—is a $2.2 trillion stimulus plan that contains funding opportunities for charities and enhanced charitable giving incentives in 2020. The following provides a general overview of the key parts of the plan intended to help you continue supporting charities that matter to you, like the Christian Brothers of the Midwest.  As always, we encourage you to consult with your own advisor for the most accurate, up-to-date information and to determine the most tax-advantaged way to make charitable gifts.

If you wish to learn more about the needs of our District ministries and how to support the work of the Christian Brothers, please know that our Development Team is here to help you and to work together with you and your advisors.

1. Temporary Universal Charitable Deduction

New Charitable Deduction for Non-Itemizers:  Taxpayers who do not itemize their deductions but choose the standard deduction ($12,000 for individual filers; $18,000 for head-of-household filers; and $24,000 for married individuals filing a joint return) will be able to claim a one-time charitable deduction of up to $300 for cash donations to qualifying 501(3)(c) organizations, such as the Christian Brothers of the Midwest, made in the calendar year 2020. This charitable deduction would be listed on the 2020 tax return, filed by April 15, 2021. This is expected to continue after tax year 2020.

Please keep in mind: 

  • Gifts must be made in cash.
  • Gifts must be made to a public charity, not to a supporting organization, private foundation or donor advised fund.
  • Gifts must be made in 2020 (or after; this is not currently limited to just this year), and cannot be carried over from excess contributions made in a prior year yet treated as made in 2020.
  • Gifts made are eligible for the above-the line deduction in addition to the standard deduction.

Higher Deduction Limits for Itemizers:  This provision is particularly beneficial to those individuals and families who can afford to make large cash contributions this year and may avoid significant capital gains and income taxes. Previously, deductible gifts to public charities were generally limited to 60% of a taxpayer’s adjusted gross income (AGI); this year there’s no cap and taxpayers who itemize deductions will be able to claim charitable contributions to the extent of their entire adjusted gross income (100%) to qualifying 501(3)(c) organizations, such as Christian Brothers of the Midwest, made in 2020. Any excess contributions available can be carried forward for the next five years, subject to the 60% AGI limit previously in place. This charitable deduction would be listed on the 2020 tax return, filed by April 15, 2021. This is expected to continue after tax year 2020.

Please keep in mind:

  • Gifts must be made in cash to qualify for the 100% of AGI deductibility. The limit for gifts of appreciated long-term capital gains property is 30% of AGI. Donors might consider generating cash and decreasing taxes by:
      • Selling depreciated securities that have declined in value below their cost. They could then realize the capital loss and contribute the cash.
      • Using a capital loss to offset gain on sale of appreciated assets, thereby avoiding capital gains taxes and using the cash proceeds to make a charitable gift without a percentage limitation.
      • Selling appreciated securities.While they’d recognize a capital gain, they could donate the sale proceeds to eliminate taxation of ordinary income.
  • Gifts must be made to a public charity, not to a supporting organization, private foundation or donor advised fund.
  • The increased deduction is not automatic; it must be elected. It is likely the IRS will provide further guidance as the 2020 tax filing deadline approaches.
  • It’s possible the deduction could be disallowed if the donor also makes noncash contributions.Please discuss this with your advisor if you are contemplating making both generous cash gifts exceeding 60% of AGI and non-cash charitable contributions.

Corporate Cash Contribution Limit and Limit on Businesses Contributing Food Inventory Increased to 25%: The new law raises the annual deduction limit for corporations from 10% to 25% of taxable income. Qualified cash gifts above the 25% limit can be carried forward for up to five years. The limitation on deductions for contributions of food inventory is increased from 15% to 25% in 2020.

2. Required Minimum Distributions (RMD) from IRAs Waived in 2020 

For the year 2020, mandatory distributions from retirement accounts are waived, thus allowing such accounts to recover, since such distributions are based on the December 31, 2019 balance of such retirement accounts. Even so, itemizers and non-itemizers can still take advantage of the tax efficient opportunity to make a qualified charitable distribution up to $100,000 from their IRA, completely avoiding income tax on the amount of the distribution.

3. IRA Charitable Rollover

The rules for the IRA Charitable Rollover remain the same. However, for those taxpayers who itemize, an individual could, in essence, withdraw and then contribute a larger amount to a qualifying 501(3)(c) organization, with the deduction offsetting the taxable withdrawal.

For more information, please contact: 

Anthony C. Chimera, M.B.A.
Director of Development

Christian Brothers of the Midwest
7650 South County Line Rd.,
Burr Ridge, IL  60527
(630) 323-3725 Ext. 211
achimera@cbmidwest.org

The CARES Act—the Coronavirus Aid, Relief, and Economic Security Act—is a $2.2 trillion stimulus plan that contains funding opportunities for charities and enhanced charitable giving incentives in 2020. The following provides a general overview of the key parts of the plan intended to help you continue supporting charities that matter to you, like the Christian Brothers of the Midwest.  As always, we encourage you to consult with your own advisor for the most accurate, up-to-date information and to determine the most tax-advantaged way to make charitable gifts.

If you wish to make a gift to support the work of the Christian Brothers, you can do so now by clicking the link below.