* The CARES Act added a $300 per return (regardless of filing status) deduction for cash giving by those who do not itemize deductions. Fewer people can itemize after the standard deduction was increased beginning in 2018, so this is a welcome change.
* The portion of one’s Adjusted Gross Income (AGI) that can be offset by donations is increased to 100% (from 60%) for cash gifts. Any excess over 100% carries forward up to five years subject to the normal 60% AGI limit each year.
* The percentage AGI limit for food inventory donations by restaurants is raised to 25% (from 15%)
* The percentage AGI limit for cash giving by taxable corporations is also raised to 25% (from 15%)
* These higher limits do not apply if given to private foundations or donor-advised funds. Nor do they apply to gifts of property.
Other incentives for giving remain in place.
* Gifts to Open Door in the form of appreciated stock allow the full value to be deducted from income while avoiding tax on the unrealized gain (subject to a 30% AGI limit), for those who itemize.
* Qualified Charitable Distributions (QCD’s) from individual retirement accounts (IRAs) are excluded from income. Thus, those who do not itemize effectively obtain a deduction because the IRA distribution would be taxable if taken personally. Each person over 70 ½ at year end can exclude up to $100,000 of QCD’s from his/her IRA. This technique is available in 2020 even though required minimum distributions (RMDs) are suspended for 2020, and the age requirement remains at 70 ½ in spite of the RMD age being raised to age 72.
* Several other techniques remain available such as charitable lead trusts, charitable remainder trusts, and gifts as part of your estate plan.