The CARES Act and SGO Giving
There were a couple of provisions in the CARES Act passed by Congress that could benefit donors who give to charitable causes in 2020. We should be knowledgeable about the provisions, but we should always point potential donors back to their tax advisors.
What are the provisions?*
- An “above the line” deduction of up to $300 for donations made in 2020 to qualified charities. This means that even people who don’t itemize on their taxes will receive a tax benefit from charitable donations.
- For individuals who are itemizing, cash contributions to charities made in 2020 can be deducted up to 100% of AGI (increased from 60%).
- Corporate donors can deduct up to 25% of their taxable income (increased from 10%) for cash contributions made in 2020.
What does it mean for the SGO?
- An estimated 90% of taxpayers claim the standard deduction rather than itemizing, so some of our donors who haven’t received any federal benefit on their gifts will have some benefit this year. That benefit is capped at $300 (some sources say that this is $600 for taxpayers who are married filing jointly, but other sources say that the cap stays at $300 even for joint filers).
- Because only 50% of SGO donations count as charitable contributions on your federal tax return, a taxpayer would need to give $600 to the SGO in order to receive the full $300 federal benefit.
- The audience that would be interested in the benefit of giving 100% of their AGI is small but savvy. They are likely receiving this information from their tax advisors, but it is good for you to be aware of the provision.
- Not all tax professionals are going to interpret this information the same way, so again, ALWAYS point potential donors back to their tax advisors.
*Sources: https://www.fidelitycharitable.org/articles/what-the-cares-act-means-for-charitable-giving.html; https://www.journalofaccountancy.com/issues/2020/sep/cares-act-charitable-deduction-for-nonitemizers.html#:~:text=Section%202204%20of%20the%20CARES,tax%20years%20beginning%20in%202020; https://www.kiplinger.com/taxes/tax-deductions/601279/do-you-qualify-for-a-300-tax-deduction-under-the-cares-act