The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on Friday, March 27. The bill includes several provisions with implications for philanthropic organizations. Highlighted below is a summary of key changes that apply for the 2020 tax year. Please note these only apply for contributions to public charities. Contributions made to donor advised funds (DAF) or supporting organization do not apply.
New Charitable Deduction Limits: As part of the bill, individuals and corporations that itemize can deduct much greater amounts of their contributions. Individuals can elect to deduct donations up to 100% of their 2020 AGI (up from 60% previously). Corporations may deduct up to 25% of taxable income, up from the previous limit of 10%. The new deduction is for gifts that go to a public charity, such as DMSF. The old deduction rules apply to gifts to private foundations. The higher deduction does not apply to donations directly to a DAF.
Non-itemizers can take a charitable deduction: The adjustment is only available for cash gifts to qualified public charities in 2020 and is limited to $300 per taxpayer ($600 for a married couple) in annual charitable contributions. It is an “above the line” adjustment to income that will reduce a donor’s adjusted gross income (AGI), and thereby reduce taxable income. This is particularly beneficial to people who take the standard deduction when filing their taxes (in other words for taxpayers who do not itemize their deductions).
Required Minimum Distributions (RMD) Waived: In 2020, there will be no mandatory distributions from retirement accounts such as IRA, 401(k), 403(b) or other defined contribution plans, regardless of the age of the account owner. RMD for individuals over age 70 ½ are suspended until 2021. This includes distributions from defined benefit pension plans and 457 plans. The RMD is an attractive way for donors to make a significant charitable gift directly from their IRA to a charity through a qualified charitable contribution (QCD) while avoiding taxable income. The suspension of the RMD may dampen somewhat the incentive for a donor who makes a gift from their IRA to count toward that minimum. However, the tax benefit of the QCD remains.
Donors directing a QCD to charity this year (up to $100,000 per individual) will still reduce their taxable IRA balance. This allows all taxpayers, itemizers and non-itemizers alike, to direct gifts from their IRA to charities in a tax efficient manner.
If your assets are substantial enough that you can give more than your income this year, you won’t lose the deduction for the excess amount. You can use it next year, as has always been the case.
If you have questions or would like assistance making a donation, you can contact us at firstname.lastname@example.org
This information is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. 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.
We are delighted that Cindy Hallums has returned to DMSF as our Chief Education Officer. Cindy has dedicated her entire career to education and education access. As Chief Ed Officer, she will oversee the Education team, while serving a key role in strategic planning, innovation, recruiting and external relations. Cindy previously worked for DMSF having served on the Education team from 2008-2013. Cindy’s experience includes:
Cindy has substantial experience in program management, strategic planning, community and school partnerships and fundraising. Cindy has worked with many in the DMSF community, including students, parents, community members and leaders, board members, and donors. Cindy received her BA in Spanish Language and Literature from Rhodes College and a Master’s Degree in Social Service Administration from the University of Chicago.
Welcome back Cindy!
In February, DMSF recognized and honored Lee Tenzer, one of the DMSF co-founders, past board member, and most dedicated supporters. Lee and his wife Marilyn were joined by fellow co-founders, DMSF’s Executive Director Jose Rodriguez, friends and fellow DMSF supporters to celebrate the incredible impact and longtime philanthropic and volunteer support to DMSF.
Whether it is the dedication to revitalizing the Greencastle Community, the remarkable support of DePauw University, or the work with DMSF’s partner organization, the Evans Scholars Foundation, the Lee and Marilyn are committed to giving back.
Lee has a long resume of personal involvement with the organization. As one of the co-founders and early believers in the mission of educational access, Lee joined the board and served on literally every committee of the organization from finance, to education, to development and served on several gala committees. He has been a longtime volunteer interviewing prospective Murphy Scholars and currently serves as a member of the DMSF Chairman’s Council.
For 30 years, Lee has made a significant commitment in making DMSF what it is today and throughout the past three decades, the generous gift of time and financial support has impacted hundreds and hundreds of scholars, their families and communities.
DMSF is incredibly grateful to Lee and Marilyn for ensuring DMSF continues to support Murphy Scholars for the next 30 years with their legacy support to the organization.
DMSF will continue to ignite potential and enrich lives because of Lee Tenzer.