1. Gift Planning
  2. Tax Benefits of the CARES Act

Tax Benefits of the CARES Act

The new CARES (Coronavirus Aid, Relief, and Economic Security) Act is designed to help you, businesses, and nonprofits facing economic hardship during the coronavirus (COVID-19) pandemic. Following is a summary of several provisions that may impact your decisions about charitable giving this year.

The Law, Explained by a Charitable Planning Attorney

 

New Tax Incentives

The CARES Act allows all taxpayers, including those who do not itemize, to take a charitable deduction of up to $300.

In addition, the law allows those who itemize their taxes to deduct up to 100 percent of their adjusted gross income for charitable cash contributions to qualified charities, such as Northwestern. The rule applies to cash gifts made during the 2020 calendar year.

Required Minimum Distributions Suspended for Retirement Accounts

The new law temporarily suspends the requirements for required minimum distributions (RMD) for the 2020 tax year. This may come as a relief to those who would have been required to withdraw a specific amount this year.

Many of Northwestern’s supporters use their RMD to make a gift from their IRA. If you are 70½ or older, you can still make a gift from your IRA or name Northwestern as a beneficiary.

Benefits of a Gift from Your IRA

  • Your gift will be put to use today, allowing you to see your generosity in action.
  • You pay no income taxes on the gift. The transfer generates neither taxable income nor a tax deduction, so you benefit even if you do not itemize your deductions.
  • Since the gift does not count as income, it can reduce your annual income level. This may help lower your Medicare premiums and decrease the amount of Social Security that is subject to tax.

Your Charitable Goals

We are so grateful for your generosity to Northwestern. Please contact Northwestern Gift Planning at giftplanning@northwestern.edu or 800-826-6709 to discuss how your gift can support University programs and initiatives, including the Student Emergency and Essential Needs Fund, which is addressing students’ urgent needs during the coronavirus pandemic.