The Black Bears Care Fund

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In March of 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act which provides new tax incentives to support giving at all levels:

1. New Charitable Deduction for Non-Itemizers:

Most taxpayers now take the standard deduction on their federal income taxes rather than itemizing their deductions.  The CARES Act allows donors to deduct up to $300 ($600 for married couples filing jointly) in cash gifts to qualified charities (like the UMaine Foundation) and still take the standard deduction amount.  This does not apply to gifts to donor-advised funds.

Example:  If you are a single taxpayer under the age of 65 and your itemized deductions for 2020 would total $7,500, you would probably claim the standard deduction of $12,400 for the year.  If you give at least $300 in cash to qualifying charities during 2020, you can elect the standard deduction of $12,400 and also deduct $300 for a total deduction of $12,700.

2. Increased Deduction Limits:

Individuals, in 2020, will be able to deduct cash gifts to qualified charities up to their entire adjusted gross income (up from 60% for 2019).  Gifts to donor-advised funds do not qualify.  The unused amount of a deduction may still be carried forward and used to the extent available in carryover years.  Corporations, in 2020, may deduct up to 25% of pre-tax income (up from 10% for 2019).

Donors with multi-year pledges may choose to accelerate the payment of their pledge balance in 2020 in order to use their charitable deduction more quickly.

3. Required Minimum Distributions Waived for 2020:

The SECURE Act, enacted in December 2019, increased the age at which IRA owners are required to take minimum distributions from 70½ years to 72 years.  Under the CARES Act, required minimum distributions (RMD) from retirement accounts are suspended for 2020 regardless of the age of the owner.  The rationale was to allow owners to reduce the amount they must take from accounts that may have been hard hit by market losses.

Those age 70½ or over may still make a tax-free transfer from an IRA directly to a charity through a qualified charitable distribution.  The annual limit for such transfers remains $100,000 per year.  Direct distributions to charity are not included in taxable income.