Increased charitable contribution limits under CARES act

A part of the Washington Policy series

2020 & 2021 contribution deductions for individuals

The charitable cash contribution amount you can deduct on Schedule A of Form 1040 as an itemized deduction is typically limited to a percentage (usually 60%) of your adjusted gross income (AGI). Qualified contributions are not subject to this limitation.

CARES Act changes

Temporary rules provided under the CARES Act 2020 and 2021, allow you to deduct qualified contributions of up to 100% of your adjusted gross income. Contributions of non-cash property do not qualify for the special rules. Taxpayers may still claim non-cash contributions as a deduction, subject to the general limits.

An additional rule under the CARES Act, for 2020 and 2021, individuals who do not itemize are allowed a deduction for up to $300 of cash charitable contributions.

Please Note: Contributions made to private non-operating foundations, supporting organizations and donor-advised funds do not qualify for this provision.

2020 & 2021 contribution deductions for C corporations

Among the tax code changes made in response to COVID-19 are two provisions under the CARES Act increasing the limitations on charitable deductions.

Generally, deductions for charitable contributions made in cash is limited to 10% of the corporation's taxable income. However, for contributions made during 2020 and 2021, corporations may deduct charitable contributions up to 25% of your taxable income.

Contributions made to private non-operating foundations, supporting organizations and donor-advised funds do not qualify for this enhanced limitation, although they remain deductible up to the general 10% limit.

Contributions of property (i.e., securities or personal property) do not qualify for the enhanced deduction limit, although they continue to be deductible subject to the existing limits.

In addition to the increased limitation for cash contributions, corporate food inventory donation deductions have changed. The new food inventory limitation for 2020 and 2021 is 25% of taxable income vs. 15% of taxable income.

Partnership & S corporation considerations

Qualifying cash contributions allocated to you by pass-through entities such as partnerships and subchapter S corporations are eligible as such items pass through to your return.

If you would like additional information contact an SVB Private Advisor today.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of Silicon Valley Bank, a division of First-Citizens Bank and First Citizens BancShares, Inc. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein.