Donations to nonprofits like Summit Schools are even more crucial during this extraordinary time – and now there is another financial incentive to do so.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act moved quickly through Congress and was signed into law by the President. A significant part of the CARES Act provides economic stimulus for businesses, but the Act also provides taxpayers with additional incentive for charitable giving.

For 2020, the Act allows taxpayers to take a charitable deduction of up to $300 – even if the taxpayer does not itemize. For those who do itemize, the CARES Act lifts the cap on cash donations from 60% of Adjusted Gross Income (AGI) to 100% of AGI, thus allowing donors to deduct more of their charitable cash contributions this year.

While the Act waives Required Minimum Distributions (RMDs) for 2020, IRA owners who have attained age 70½ may continue to make Qualified Charitable Distributions (QCDs) from their IRAs. A QCD is a direct transfer of funds from one’s IRA, payable to a qualified charity. A QCD excludes the amount donated from the IRA owner’s taxable income, which is unlike regular withdrawals from an IRA. The maximum annual amount which can be given is $100,000 per taxpayer (spouses are permitted to each give a maximum of $100,000 provided that the participating spouse is at least 70½ and the QCDs are made from their respective IRAs). A QCD must be transferred directly from the IRA custodian to the charity by December 31. The charity must be a 501(c)(3) organization.

(This information was provided by Hills Bank’s Trust and Wealth Management Department and is intended to be informational only. Individuals should seek guidance from their tax and legal advisors.)

To make a charitable donation to Summit please visit our Giving page.