CARES Act Tax Benefits

To help address the potentially adverse effects of COVID-19, the recently-passed CARES Act provides the following key elements for 2020 to encourage continued philanthropic support of nonprofit institutions, including Kalamazoo College.

Required Minimum Distributions Suspended

The CARES Act temporarily waives required minimum distributions (RMDs) from qualified retirement plans and IRAs for calendar year 2020.

Why a Gift from Your IRA May Still Be a Good Idea in 2020

  • Your gift will be put to use today, allowing you to see the difference your donation is making.
  • You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
  • Since the gift doesn’t count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.

New $300 above-the-line deduction (for non-itemizers)

The CARES Act adds a new deduction that allows taxpayers/households who do not itemize to deduct up to $300 of cash contributions (not donations of stock, real estate or other non-cash types of property) to a qualified charity, in addition to the standard deduction.

Increased charitable deduction limits (for itemizers)

Under the CARES Act, the deduction for cash contributions to a qualified charitable organization in 2020 is 100% of an individual’s adjusted gross income (up from 60%).

If the contribution exceeds the limitation, the individual can still carry forward and utilize the excess amount over the following five years.

A donation to a donor-advised fund or private foundation does not qualify for these new deductions.

Questions?

If you have questions or would like more information, please contact Senior Associate Director of Planned Giving Matthew Brosco, Esq. at 269.337.7236 or mbrosco@kzoo.edu.

Thank you for your continued generosity and support of K during this turbulent time.

 

 

Figures cited in any examples are for illustrative purposes only. References to tax rates include federal taxes only and are subject to change. State law may further impact your individual results.