Like you, the Catholic Education Foundation is adapting and changing in response to the COVID-19 pandemic and accompanying economic uncertainty. The Foundation is grateful for the generous support of our work to assist financially needy families obtain a Catholic education for their children. Now there are new opportunities for charitable giving via the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act.
For the 2020 tax year only, you may deduct cash contributions to the Catholic Education Foundation and most other public charities to offset up to 100% of your income. Ordinarily, that deduction is limited to 60%. This 100% limit allows especially generous donors to reduce their 2020 federal income tax to zero. Those who are even more generous can carry forward unused cash contributions for up to five years. Contributions to Donor Advised Funds or supporting organizations are not eligible for this deduction. Your ability to deduct up to 100% of your income with cash gifts is reduced by your gifts of appreciated assets such as publicly traded securities and real estate for example. That means your charitable deductions in 2020 cannot exceed 100% of your income, but you may be able to carry unused charitable deductions forward to future years.
Of note: because federal income tax rates are progressive, it is not a given that it will be to your advantage to deduct 100% of your cash contributions in 2020. Consult with a financial or tax advisor or attorney to determine whether the 100% deduction makes sense for your specific circumstances.
If you take the standard deduction and do not itemize in 2020, you can still reduce your taxable income by up to $300 for contributions of cash to public charities using an “above the line”
adjustment to reduce your taxable income.
The CARES Act waives required minimum distributions from retirement plans for 2020. Check with your financial adviser to see how this temporary rule will apply to you. Minimum distributions that have already started are still required from some defined benefit pension plans, but some required minimum distributions that would have started in 2020 may not have to start until 2021.
Qualified charitable distributions, also known as the ‘IRA Charitable Rollover,’ are still a great way if you are 70 ½ or older to make a tax-free gift of up to $100,000 to the Catholic Education Foundation from your IRA. While the benefit of using a QCD to satisfy your required minimum distribution has been waived for 2020, it remains a great way to make tax advantageous contributions, especially if you don’t itemize your deductions.
The CARES Act provides additional tax incentives to encourage charitable giving. You have important priorities for your family and loved ones, and we know that their health and financial well-being comes first. When you are ready, we can help you shape a charitable gift plan that suits your needs and allows you to keep helping students receive the gift of a Catholic education. Contact Jennifer Georgis at jgeorgis@dioceseofjoliet or call (815) 221-6131 to learn more.
Catholic Education Foundation : 815.221.6127 : 16555 Weber Road, Crest Hill, IL 60403: http://cefjoliet.org/