Typically, tax law limits charitable deductions to 60% of your adjusted gross income (AGI). However, there is a temporary suspension of the limits on deductible charitable contributions under the CARES Act. For a contribution to qualify, it must be a cash contribution made to a qualifying organization during the 2020 calendar year. Donor Advised Funds and Private Foundations are not qualifying organizations under this rule.
A taxpayer must itemize their deductions on their tax return to receive the deduction. Taxpayers who make qualified charitable contributions in excess of 100% of their AGI can carry the deduction forward for up to five years. While the CARES Act suspends limits on these deductions for federal taxes, states may still adhere to deduction limits.
This provision of the CARES Act may be particularly beneficial to charitable taxpayers with unusually high income in 2020. You should discuss any large charitable gifts and other tax planning strategies with your financial advisor or tax professional prior to making large charitable gifts.
Resources for Charitable Deductions
IRS Publication 526
IRS, Charitable Contribution Deductions
Lastly, read more about the CARES Act $300 Above-the-Line Charitable Tax Deduction.