You Can Deduct $300 for Charitable Contributions This Year While Taking Standard Deduction

charitable gifts

The Coronavirus Aid, Relief and Economic Security (CARES) Act included several temporary tax changes to help charities, including the special $300 deduction designed especially for people who choose to take the standard deduction.

Under this new change, individual taxpayers can claim an “above-the-line” deduction of up to $300 for cash donations made to qualifying tax-exempt organizations during 2020. “Above-the-line” deduction means this deduction lowers both adjusted gross income and taxable income.

Before making a donation, the IRS reminds taxpayers that they can check the special Tax Exempt Organization Search Tool on the IRS website to make sure an organization is eligible for tax-deductible donations.

Cash donations include those made by check, credit card or debit card. They do not include securities, household items or other properties. Additionally, cash contributions made to supporting organization and donor-advised funds do not qualify.

Be sure to keep good records of charitable contributions. By law, special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. This includes obtaining a receipt or acknowledgement letter from the charity and retaining a cancelled check or credit card receipt.

Furthermore, the CARES Act includes other temporary provisions designed to help charities. These include higher charitable contribution limits for corporations, individuals who itemize their deductions and businesses that give food inventory to food banks and other eligible charities.

For more information about these and other Coronavirus-related tax relief provisions, please contact our firm.