CARES Act Charitable Donations and Rollover

The CARES Act charitable donations rules temporarily changed federal tax law to encourage giving by expanding deduction options for cash gifts during 2020 and 2021. A lot of people have been asking me about the CARES Act and data about rollover for donations.

Here is what I found so far:

“Previously, deductible gifts to public charities were generally limited to 60% of a taxpayer’s adjusted gross income (AGI); this year there’s no cap and donors can deduct up to 100% of AGI for 2020. Any excess contributions available can be carried forward for the next five years, subject to the 60% AGI limit previously in place.”

From https://bloomerang.co/…/how-to-let-donors-know-new…

As far as I can tell, rollover from previous years would be at the cap for that year, 50 or 60% of AGI depending on how it was donated.

The 2020 standard deductions are as follows:

Single; Married Filing Separately   $12,400
Married Filing Jointly                      $24,800
Head of Household                        $18,650

This means in order to take advantage of this part of the CARES Act, you have to be donating more than the standard deduction.

There is also this from the same article:

“Above-the-line universal charitable deduction.
This provision is the one I find most useful for nonprofits of all sizes. It provides for a universal, above-the-line, deduction of up to $300 cash made by anyone who takes the standard deduction; they don’t need to itemize to benefit from this provision. This will reduce their taxable income for 2020. Maybe not by a lot, but it makes giving to you less expensive for donors.”

Anyone can take advantage of that, whether you itemize or not.

This year, your favorite charities need more help than ever. Please consider surprising them with a donation before the end of the year. They will be forever grateful, and you may end up changing people’s lives.

Because the CARES Act charitable donations incentives increased deduction limits and created a limited above‑the‑line deduction, many taxpayers were able to maximize their tax benefits for qualified gifts.

Happy Holidays!

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Frequently Asked Questions

What were the CARES Act charitable donation changes?

The CARES Act temporarily expanded charitable deduction rules by increasing deduction limits for certain cash donations and creating an above-the-line charitable deduction for taxpayers who did not itemize deductions.

Can taxpayers deduct charitable donations without itemizing?

Yes. The CARES Act allowed eligible taxpayers who took the standard deduction to claim a limited above-the-line deduction for qualifying cash charitable contributions.

How much charitable donation can be deducted under the CARES Act?

For eligible cash donations during the CARES Act period, taxpayers who itemized deductions could deduct qualified contributions up to increased AGI limits, including a temporary increase up to 100% of adjusted gross income for certain donations.

Can excess charitable contributions be carried forward?

Yes. If eligible charitable contributions exceeded the allowed deduction limit, the excess amount could generally be carried forward to future tax years, subject to applicable IRS limits.

What types of donations qualify for CARES Act charitable deductions?

The CARES Act charitable deduction changes generally applied to qualifying cash donations made to eligible charitable organizations. Taxpayers should verify that organizations meet IRS requirements before claiming deductions.

How can bookkeeping help track charitable donations for taxes?

Accurate bookkeeping helps individuals and businesses maintain donation records, organize receipts, and provide the documentation needed to properly report charitable contributions during tax preparation.