Take advantage of a special charitable giving tax deduction thanks to the CARES Act, expiring at the end of this year.
As part of the COVID relief package Congress passed in March, taxpayers can take a deduction of up to $300 for cash donations made to qualifying organizations during 2020.
Previously, taxpayers could only take charitable deductions if they itemized their deductions. This year, those taking a standard deduction will be able to take an additional $300 up to 100 percent of their adjusted gross income (up from 60 percent) for cash donations made this calendar year.
According to the New York Times, changes to the federal tax code in 2017 only allowed for charitable deductions if people itemized their deductions, leading to a tax disincentive for giving. This one-time “universal” deduction makes it easier to receive a tax benefit for cash donations. The deduction will reduce the adjusted gross income by $300, which helps determine eligibility for tax credits and other deductions. It will also reduce taxable income.
Further reading:
“It’s Easier to Get a Tax Deduction for Donations This Year,” New York Times
“How to Be Effective With Your Generosity in 2020,” NerdWallet
This is not intended to serve as financial advice. Consult a tax adviser for questions you may have on this tax benefit.