The CARES Act, enacted spring 2020, includes several temporary tax changes designed to help charities and those individuals who make cash donations to them. This includes a special $300 deduction designed especially for people who choose to take the standard deduction, rather than itemize their deductions when filing their 2020 taxes.
The $300 deduction is specifically for those donations made in cash. The IRS defines “cash donation” of those donations made in currency, credit or debit cards or electronic money transfer. This does not qualify for “contributions of property”- such as donated clothing or household items.
Most donations to charities and other 501(c)(3) organizations do qualify for this special deduction, but not all donations and organizations may qualify. The IRS reminds everyone that you can utilize the Tax Exempt Organization Search (TEOS) tool on their website to see if the donation is eligible for tax-deduction donations, or speak with your local tax professional.
According to the IRS, nearly nine in 10 taxpayers now take the standard deduction and could qualify for this for this new deduction. However, this hasn’t always been the case. In the past, charitable donations could only be deducted by those who itemized their returns. As always, the IRS urges taxpayers to keep good records and receipts of all charitable giving.
In addition to assisting individuals, the CARES Act includes provisions to help corporations and businesses, including increasing charitable contribution limits from 10% to 25% for corporations and businesses that assist food banks, food pantries and other eligible organizations.
And more good news is on the way- for filing 2021 taxes, charitable giving deductions are even better for those who file their taxes jointly. For the 2021 tax year, the limit has been increased from $300 per “tax unit” to $600. This means that those who are married and filing jointly can each take a $300 deduction for a total of $600.
This $300 deduction could help hundreds of non-profit organizations gain some useful traction in the rebuilding efforts in a post-Coronavirus economy. This $300 deduction could be the benefit that some Americans are looking for to increase or expand their charitable giving.
If you need additional time to gather receipts or records, there is good news. The IRS recently announced in March 2020 that the filing deadline for 2020 taxes would be extended from April 15, 2021 to May 17, 2021.
This content was originally published on the Moses PC website: https://mosespc.com/2021/04/12/the-cares-act-charitable-giving-deductions/
Anne Moses is a Certified Elder Law Attorney at Moses PC. Anne received her B.A. from Barnard College, Columbia University, New York; and her Juris Doctor from St. John’s University School of Law. She is admitted to practice in the states of New York and Alabama and is engaged in estate and business planning; estate and trust administration, and elder law planning. She is certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation.
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