701 W. 6th Street
785-222-2574
785-222-9034

Tax Benefits of the CARES Act

Tax Benefits of the CARES Act

The new CARES (Coronavirus Aid, Relief, and Economic Security) Act is designed to help you, businesses, and nonprofits facing economic hardship during the coronavirus pandemic.

Here are a few key provisions of the CARES Act that may affect you and your charitable goals:

Required Minimum Distributions Suspended

The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This may come as a relief to many who would have had to withdraw from their retirement accounts. Despite the RMD suspension, remember that if you are 70½ or older, you can still make a gift from your IRA or name Locust Grove Village as a beneficiary.

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

  • 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 does not 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 Tax Incentives

New Deduction Available: A charitable deduction of up to $300 per taxpayer ($600 for a married couple) is available to those who take the standard deduction (taxpayers who do not itemize their deductions). This new deduction is an “above the line” adjustment to income that will reduce a taxpayer’s adjusted gross income (AGI) and reduce their taxable income.

To qualify, donors have to make a contribution to a qualified charity, like Locust Grove Village. If you have already made a donation since January 1, that contribution counts toward the $300 cap. Donations to donor-advised funds (DAF) do not qualify for this new deduction.

New Charitable Deduction Limits: For those who do itemize their deductions, the new law allows for cash contributions to qualified charities such as Locust Grove Village to be deducted up to 100% of your adjusted gross income for the 2020 calendar year, up from 60% previously. The old deduction rules still apply for donations to a Donor Advised Fund or private foundation. The new limits also do not apply to gifts of appreciated stock.

Your Charitable Goals

We are deeply grateful for your continued kindness and support during this difficult time. Please contact Charlotte Rathke at crathke@locustgrovevillage.com or 785-222-2574 to discuss how your gift can help further our mission.

Information contained herein was accurate at the time of posting. The information on this website 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.

The new CARES (Coronavirus Aid, Relief, and Economic Security) Act is designed to help you, businesses, and nonprofits facing economic hardship during the coronavirus pandemic.

Here are a few key provisions of the CARES Act that may affect you and your charitable goals:

Required Minimum Distributions Suspended

The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This may come as a relief to many who would have had to withdraw from their retirement accounts. Despite the RMD suspension, remember that if you are 70½ or older, you can still make a gift from your IRA or name Locust Grove Village as a beneficiary.

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

  • 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 does not 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 Tax Incentives

New Deduction Available: A charitable deduction of up to $300 per taxpayer ($600 for a married couple) is available to those who take the standard deduction (taxpayers who do not itemize their deductions). This new deduction is an “above the line” adjustment to income that will reduce a taxpayer’s adjusted gross income (AGI) and reduce their taxable income.

To qualify, donors have to make a contribution to a qualified charity, like Locust Grove Village. If you have already made a donation since January 1, that contribution counts toward the $300 cap. Donations to donor-advised funds (DAF) do not qualify for this new deduction.

New Charitable Deduction Limits: For those who do itemize their deductions, the new law allows for cash contributions to qualified charities such as Locust Grove Village to be deducted up to 100% of your adjusted gross income for the 2020 calendar year, up from 60% previously. The old deduction rules still apply for donations to a Donor Advised Fund or private foundation. The new limits also do not apply to gifts of appreciated stock.

Your Charitable Goals

We are deeply grateful for your continued kindness and support during this difficult time. Please contact Charlotte Rathke at crathke@locustgrovevillage.com or 785-222-2574 to discuss how your gift can help further our mission.

Information contained herein was accurate at the time of posting. The information on this website 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.