CARES Act Provisions May Benefit You and Your Family as You Consider Supporting Virginia Athletics With a Donation to the Virginia Athletics Foundation
The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020 includes two provisions of note to VAF donors as follows.
CARES Act charitable giving incentives for 2020 include:
- Non-itemizers may claim a $300 “above the line” deduction for qualified cash gifts to public charities.
- Itemizers may elect an unlimited deduction (up to 100% of adjusted gross income) for qualified cash gifts to public charities.
This new provision can be combined with existing deductions for gifts of appreciated property. For example, if in 2020 Katie Wahoo contributes $60,000 of appreciated stock to the VAF, she can deduct the stock value up to 30% of her AGI under existing law. Assuming Katie’s AGI is $200,000 in 2020, she can reduce her federal taxable income to $0 by also making a cash contribution of at least $140,000 and electing the new 100% AGI deduction for cash contributions. She will owe no federal income tax in 2020. If her qualified cash gifts exceeded 100% of her 2020 AGI (for example, if she contributed $60,000 of stock and $160,000 in cash), she can carry forward any unused qualified cash gift deduction — in this example $20,000 — for up to five additional tax years and reduce her future taxable income. The carryforward will be subject to the normal 60% of AGI limit beginning in 2021.
Consult your tax advisors to determine whether making the election is advisable. Because federal income tax rates are progressive, you may be better off using the regular 60% AGI cash gift deduction limit this year so that you have sufficient carryforward amounts to offset taxable income (and possibly move down a bracket) in future years, reducing overall taxes paid over two or more years.
The Internal Revenue Service has issued guidance and clarification regarding some of the CARES Act provisions. Please check the IRS’s Coronavirus Tax Relief and Economic Impact Payments website for updated information.
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Planned gifts combine philanthropic goals with smart financial strategies. The University’s Office of Gift Planning can be reached at 434-924-7306 or giftplanning@virginia.edu.