Tax Benefits of the CARES Act

The new Coronavirus Aid, Relief, and Economic Security Act, or CARES, is designed to help you, businesses and nonprofits facing economic hardship during the coronavirus pandemic. Several key provisions of the CARES Act may affect you and your philanthropic goals:

Suspension of required minimum distributions

The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This probably comes as a relief to many of you who would have had to withdraw from your retirement accounts. Many of our donors use their RMD to make a gift from their IRA. Despite the RMD suspension, remember that if you are 70½ or older, you can still make a gift from your IRA or name Florida State University as a beneficiary.

Benefits of a gift from an IRA

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 Medicare premiums and decrease the amount of Social Security that is subject to tax.

New tax incentives

The CARES Act allows taxpayers to take a charitable deduction of up to $300 ($600 for married couples) for those who take the standard deduction. You might think that this is a small amount and would not make a difference. But what if all of our donors gave “just” $300? Such support would have a huge impact on those we serve. For those who do itemize their deductions, the new law allows for cash contributions to qualified charities such as Florida State University to be deducted up to 100% of your adjusted gross income for the 2020 calendar year.