Charitable giving just got both more challenging and lucrative for 2020. To address the pandemic’s hit on the nonprofit sector, Congress has included benefits to nonprofits in the CARES Act. Here’s what that means for you as you give to charity this tax year — and this tax year only. If taxes and charitable giving are new to you, consider reading my giving essay. That goes into more depth for normal years.

Up To $300 Above-The-Line Deduction

Normally, charitable gifts may only be itemized. Many of us, however, don’t itemize because it only makes sense to do so if you can exceed the standard deduction. Best case scenario, that means stacking up over $10K in itemized deductions, which can be challenging for most of us.

Above-the-line deductions, on the other hand, are available for everyone and lower your tax burden. Plus, above-the-line deductions affect your adjusted gross income. Lowering your adjusted gross income can have multiple beneficial interactions in taxes you pay.

The CARE Act allows for an above-the-line deduction of up to $300. This does not apply for those who itemize, and the donation must be made in cash. It doesn’t work if you use stocks or personal property, for instance. This unique deduction applies to gifts to most nonprofit types, but it can’t be used to give to a donor-advised fund.

Takeaway: You should give at least $300 cash this year to charity. It’s unlikely you’ll see this available again.

No Limit On Cash Charitable Donation Deductions

While the previous perk didn’t apply to those who itemize, this one is for the itemizers.

Normally when you itemize charitable gifts, you’re capped at the amount of both cash and stock gifts that you can give in a single year. The CARES Act changes that for cash gifts (stock limitations stay the same at 30% for traditional nonprofits). Cash-based charitable gifts may now be deducted up to 100% of adjusted gross income. The normal carry-over rules to future years apply if you go beyond that.

Like the above-the-line deduction perk, this deductible gift only applies to most nonprofit types, but it can’t be used to give to a donor-advised fund.

Your Upcoming Check

If in your recent tax filing you earned less than $99K you should have a check coming your way. These checks will vary from $1,200 to less if you earned between $75K and $99K.

Of course, many folks in financial crisis will need this money for basic needs. But if that’s not you, consider having that go to a charitable cause. At least take advantage of that $300 deduction if you can.

Timely Tips

If you have a donor-advised fund, this may be a good time to start spending from it. Charities will experience shock this year and will be counting on you.

If you’ve read my essay on charitable giving and taxes, you’ll recall that appreciated investments held longer than a year get special tax benefits when you use them as charitable gifts. You don’t realize the gains on your income and you get to deduct the fair market value of the asset. With stocks down, this may be a good time to purchase stock while it’s low, hold onto it for over a year, and then give the (hopefully) appreciated stock to charity.

Where To Give

When this pandemic is all over, nonprofits and the rest of us will have to go on. One way to help ensure that future is to make sure that we have a solid voting method to elect strong leadership during these types of crises. We need a strong government so we have policies in place to properly fund and set up pandemic preparedness. Empowering you with a better voting method is exactly the work The Center for Election Science does. As its executive director, I — of course — recommend it highly.

For other good causes, check out the recommendations on my giving page. You’ll find many causes there that fall under effective altruism, which you should definitely check out.

Stay safe!