We are certainly living in unprecedented times, aren’t we? COVID-19 has changed every aspect of our lives. We want to keep you updated on anything related to COVID-19 that will impact charitable giving, like the CARES Act.
The U.S. Congress has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the president has signed it into law. Below are some of the highlights as they relate to charitable giving.
Please contact your WELS Foundation team at [email protected], your WELS Christian giving counselor at wels.net/givingcounselors, or other mission advancement representative at other WELS-affiliated ministries with questions at any time.
Highlights of the CARES Act*
• The law allows an above-the-line income tax charitable deduction up to $300 even if you don’t itemize on your 2020 income tax return. The tax break is available to people who claim the standard deduction, which is $12,400 for singles or $24,800 for married-filing jointly in 2020. This provision was inserted specifically to encourage charitable giving this year.
• The CARES Act impacts owners of Individual Retirement Accounts (IRAs) by providing a temporary waiver of Required Minimum Distributions (RMDs) for 2020, allowing IRA owners to keep funds in their IRAs (and other qualified retirement plans). The decreased value of their IRAs may motivate some people to keep funds in their accounts temporarily, waiting to see what happens in the investment markets. Donors age 70.5 and older may still make direct distributions to charity from their IRA, just as before, if it makes financial sense to do so.
• For the 2020 tax year only, donors may elect to apply a 100% of adjusted gross income (AGI) limit to cash gifts to public charities. Gifts to donor advised funds (DAFs) don’t qualify. This means that in 2020, a donor who deducts 30% of AGI in long-term appreciated property gifts and elects the 100% of AGI limit for qualified cash contributions will be able to also deduct up to 70% of AGI for qualified cash gifts, a total deduction of up to 100% of AGI. If this donor uses all available deductions for qualified cash gifts, that donor will pay no federal income tax in 2020. (Please note: Donors should consult their tax advisers to determine whether the 100% election makes sense for them.)
• The new law, coupled with current financial uncertainty, has created an appealing climate for those concerned about their income from investments. Please let us know if would like to learn more about how you can transfer assets (cash, securities, real estate, etc.) into a secure income stream for yourself and/or others while also providing for the Lord’s work.
• Recent steps taken by the Federal Reserve Bank on federal lending rates have made certain charitable gift strategies more appealing than they have been in some time. Please let us know if would like to learn more about how you can reduce the size of your taxable estate for a planned transfer to heirs, all while making a sizable gift to the Lord’s work.
• If you’re thinking of updating your estate plan, we would be pleased to help you consider including a gift to your local congregation and/or other WELS or WELS-affiliated ministries.
In the meantime, this is a good time to just stay in touch. Please reach out to your Christian giving counselor or mission advancement representative with questions about what is going on locally and nationally to discuss those ministries that are of most interest to you. They will be glad to hear from you.
Please continue doing everything you can to help keep yourselves, your families, and your communities safe. And as with all situations in life, we lean on our Savior’s promises that he will never leave us or forsake us. May God bless you all!
*CARES Act summary compiled by Dan Shephard of The Shephard Group