How the impact of the new CARES Act may affect you:
The City College of New York and its students need your support now more than ever. Your continuing support is more crucial than it has ever been and this will continue for the foreseeable future. The CARES Act recently passed by Congress may have an impact on your philanthropic planning. We want you to be aware of how these changes may help you plan how best to approach your gift giving to the College and to all the worthwhile organizations you support.
New Charitable Deduction for Non-Itemizers
Taxpayers who take the standard deduction rather than itemizing will now be able to claim a deduction of up to $300 for cash donations made this year.
Individuals will be able to deduct gifts to the extent of their entire adjusted gross income.
Corporations will be able to deduct gifts up to 25% of the corporation’s taxable income.
Required Minimum Distributions Waived
During 2020, there will be no mandatory distributions from retirement accounts no matter what age you are. The purpose of this aspect of the Act is to allow your retirement funds to recover from the economic impact of the pandemic.
The minimum age for making a tax-free transfer (a qualified charitable distribution) from your IRA to charity remains at 70 ½ . The annual limit for making a qualified charitable distribution (which we refer to as an IRA Rollover Gift) remains at $100,000 per spouse for the total of your support given this way to all of your charities.
Note: Since gifts given from your IRA directly to charity will be deductible in 2020, you can consider withdrawing and then contributing a larger amount (with the deduction offsetting the taxation on your withdrawal.
Waiver of Penalties If You Use Retirement Funds for Coronavirus Purposes
If you are under 59 ½ and withdraw funds from your retirement plan to cover expenses incurred by you and your family members related to treatment of the coronavirus, the usual 10% tax penalty will not apply.
The taxation of the amount you used for coronavirus-related expenses can be spread out over three years.
The amount you withdraw to cover virus-related expenses can be added back to your retirement fund later without regard to the usual contribution limits.