2020 CARES ACT AND 2019 SECURE ACT
The CARES Act (Coronavirus Aid, Relief, and Economic Security Act) includes provisions designed to stimulate charitable giving. Following are a few key provisions for donors.Charitable Deduction for Taxpayers Who Do Not Claim Itemized Deductions
Taxpayers who take the standard deduction rather than itemizing their deductions can claim a charitable tax deduction of up to $300 for cash donations made in 2020.Higher Deduction Limits
Individuals in 2020 can deduct cash gifts up to 100% of their adjusted gross income. For businesses, the new law increases the deduction limit from 10% to 25% of the corporation's taxable income, for 2020 only.Required Minimum Distributions (RMDs) Waived
For the year 2020, IRA owners are exempt from taking Required Minimum Distributions (RMD) from their accounts. However, persons who are 70 ½ or older may still make a charitable distribution from an IRA directly to charity of up to $100,000. To learn more about charitable giving through an IRA, visit our IRA Gift Planning page.
Please note that the CARES Act includes some caveats:
- The increased limits for individual and corporate taxpayers apply to cash contributions only.
- Deductions are limited to gifts to public charities and certain foundations.
- The provisions do not apply to gifts to donor-advised funds or supporting organizations.
The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) passed in December 2019, includes important changes for retirement accounts.Age increase for start of RMDs
For those not yet age 70 ½ by the end of 2019, the age at which you start taking required minimum distributions (RMDs) from your retirement accounts was increased from age 70 ½ to 72. However, an exception for 2020, created by the CARES Act eliminates required minimum distributions for this year.Charitable Distributions Still Available at Age 70 ½
Anyone age 70 ½ or older may still use qualified retirement plans to make gifts to make gifts to Seattle University through a qualified charitable distribution (QCD), even if you do not yet need to take required minimum distributions. QCDs are a tax-smart way to make charitable gifts whether you itemize or not.Non-Spouse Beneficiaries of IRAs Must Take Full Payment Within 10 Years
The SECURE Act eliminated the stretch IRA for non-spouses. This means that most IRA beneficiaries are now required to take the full account payout within 10 years of the passing of the original account holder. Previously, distributions from the IRA could be taken over a beneficiary's lifetime, allowing a longer timeframe to pay the associated income tax. This is a significant change, not affected by the CARES Act, that impacts any estate planning where an IRA account holder has named children or other family members who are not a spouse as beneficiaries of a retirement account. This may provide an even bigger tax incentive to use retirement accounts for gifts to charity and leave assets with a lower tax burden to loved ones.
Both the CARES Act and the SECURE Act include many other provisions that
could benefit you financially. Consult your advisors for a full
understanding of the effect of these provisions, and
contact the Gift Planning team
at Seattle University at 206-296-6974 or email firstname.lastname@example.org if
we can assist in any way with your charitable giving. We would love to hear
how you are doing!
This information was accurate at the time of posting. The information on this website is for educational purposes only. Please consult with an attorney or tax advisor for legal or tax advice that is specific to your personal needs and goals.