The new CARES (Coronavirus Aid, Relief, and Economic Security) Act is designed to help Americans, businesses and nonprofits facing economic hardship during the coronavirus pandemic. This includes changes that affect donors to Central College.
Here is a look at a few provisions of how it could affect charitable goals:
Required Minimum Distributions Suspended
The new law temporarily suspends the requirements for required minimum distributions from individual retirement accounts for the 2020 tax year. This probably comes as a relief to many donors who would have had to withdraw from their retirement accounts. Many of Central’s donors use their required minimum distribution to make a gift from their IRA. Despite the distribution suspension, if a donor is 70½ or older, they still can make a gift from their IRA and name Central as a beneficiary.
Why a Gift From An IRA May Still Be a Good Idea
A gift now will be used immediately, allowing a donor to see the difference a donation makes. A donor pays no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so donors benefit even if they do not itemize their deductions. Since the gift doesn’t count as income, it can reduce annual income level. This may help lower Medicare premiums and decrease the amount of Social Security that is subject to tax.
New Tax Incentives
The CARES Act expands charitable giving incentives and allows taxpayers who take the standard deduction to make up to $300 of charitable contributions to qualified charities this year. For those who do itemize their deductions, the new law allows for cash contributions to qualified charities such as Central to be deducted up to 100% of their adjusted gross income for the 2020 calendar year.
“We know these are unprecedented times and we deeply cherish our relationships with our entire Central family,” says Michelle Wilkie, director of development. “Central’s advancement team is here to serve as a resource for those whose charitable goals may be affected by the CARES Act.
“In times of much uncertainty, Central remains steadfast in our mission to help students discover and develop their greatest potential. We remain grateful to our Central family for continuing to lift the mission of the college. Thank you!”