Above-the-Line Charitable Contribution

The CARES Act authorizes an eligible individual to take a qualified charitable contribution deduction of up to $300 against their AGI in 2020. An eligible individual is any individual taxpayer who does not elect to itemize deductions. A qualified charitable contribution is a charitable contribution if:

  • it is made in cash,
  • for which a charitable contribution deduction is otherwise allowed, and
  • that is made to certain publicly supported charities.

NOTE: This above-the-line charitable deduction may not be used to make contributions to a non-operating private foundation or to a donor-advised fund.

Modification of limitations on cash contributions
Under pre-Act law, individuals who make cash contributions to publicly supported charities are permitted a charitable contribution deduction of up to 60% of their AGI. Contributions in excess of the 60% AGI limitation are carried forward as a charitable contribution in each of the five succeeding years.

The CARES Act temporarily suspends the 60% of AGI limitation for qualifying cash contributions, permitting individual taxpayers to take a charitable contribution deduction for qualifying cash contributions made in 2020 of up to 100% of their AGI. Any excess is carried forward as a charitable contribution in each of the succeeding five years. Taxpayers wishing to take advantage of this provision must make an affirmative election on their 2020 income tax return.

This provision is useful to taxpayers who elect to itemize their deductions in 2020 and make cash contributions to certain public charities. As with the $300 above-the-line deduction, contributions to non-operating private foundations or donor-advised funds are not eligible for this Act benefit.

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