The CARES Act signed into law in response to the COVID-19 Pandemic offers special charitable giving incentives for three categories of donors in the 2020 tax year. These may allow you to maximize the tax benefits of giving to the Phi Kappa Tau Foundation.

For Itemizers…

The adjusted gross income (AGI) limit for cash contributions was increased for individual donors. For cash contributions made in 2020, you can now elect to deduct up to 100 percent of your AGI (increased from 60 percent).

For non-itemizers…

The CARES Act allows for an additional, “above-the-line” deduction for charitable gifts made in cash of up to $300. If you are not itemizing on your 2020 taxes, you can claim this new deduction.

For those over 59½ years old with Individual Retirement Accounts (IRAs)…

The CARES Act did not change the rules around the IRA Qualified Charitable Distribution (QCD), which allows individuals over 70½ years old to donate up to $100,000 in IRA assets directly to a charity like the Phi Kappa Tau Foundation annually, without taking the distribution into taxable income.

However, under the CARES Act, you can elect to deduct 100 percent of your AGI for cash charitable contributions. This effectively affords individuals over 59½ years old the benefits similar to a QCD; you can take a cash distribution from your IRA, contribute the cash to charity, and may completely offset tax attributable to the distribution by taking a charitable deduction in an amount up to 100 percent of their AGI for the tax year.

If you’re planning a large donation in 2020, this may be a smart strategy as long as you are between the ages of 59½ and 70½ and are not dependent on existing retirement funds.

For more information contact Director of Philanthropy Charlie Ball at cball@phikappatau.org.

This is not intended as tax or legal advice. Please consult your financial or legal advisor.