The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes several temporary tax changes that help charitable organizations. One such provision allows taxpayers to deduct cash donations of up to $300 made before December 31, 2020.
Designed especially forpeople who choose to take the standard deduction, rather than itemize. Intax-year 2018, the most recent year for which complete figures are available,more than 134 million taxpayers claimed the standard deduction, just over 87percent of all filers.
Under this new change,individual taxpayers can claim an “above-the-line” deduction of up to$300 for cash donations made to charity during 2020. This means the deductionlowers both adjusted gross income and taxable income – translating into taxsavings for those making donations to qualifying tax-exemptorganizations.
Before making adonation, however, taxpayers should use the special Tax Exempt OrganizationSearch (TEOS) tool on IRS.gov to make sure the organization is eligible fortax-deductible donations.
Cash donations includethose made by check, credit card, or debit card. They don’t include securities,household items, or other property. Though cash contributions to most charitableorganizations qualify, those made to supporting organizations and donor-advisedfunds do not.
Be sure to keep goodrecords. By law, special recordkeeping rules apply to any taxpayer claiming acharitable contribution deduction. Usually, this includes obtaining a receiptor acknowledgment letter from the charity, before filing a return, andretaining a canceled check or credit card receipt.
The CARES Act alsoincludes other temporary provisions designed to help charities. These includehigher charitable contribution limits for corporations, individuals who itemizetheir deductions, and businesses that give food inventory to food banks andother eligible charities.
For more informationabout these and other Coronavirus-related tax relief provisions, don’t hesitateto call the office and speak to a tax professional who can assist you.