Charities are struggling particularly this year in the time of Covid. Demand is higher and fewer people are in a position of being able to donate. December is a time when many people donate to their charities of choice. This year, through a special provision enacted through the Coronavirus Aid, Relief and Economic Security (CARES) Act, more people are able to easily deduct up to $300 in donations to qualifying charities.
Cash donations which include those made by check, credit card, or debit card made by December 31, 2020 to qualifying charities are deductible. This deduction was designed specifically for those who take the standard deduction versus itemizing their deductions. Close to 90% of taxpayers currently take the standard deduction and could therefore qualify for this deduction.
Previously, because of the great numbers of taxpayers taking the standard deduction, few were able to take advantage of the charitable deduction. This year, to stimulate and reward giving in these trying times, this one-time $300 charitable deduction was created for people who do not itemize on their tax returns. These donations must be made to 501(c)3 charities. Gifts of securities, household items, or other property do not qualify. You can look at the tax exempt organization search tool on the IRS website to make sure your charity of choice is a qualifying organization.
As a reminder, when giving to charities keep good records. Keep receipts from the charity, cancelled checks or credit card receipts.
There are also temporary provisions enacted by the CARES Act which allow higher contribution limits for corporations, individuals who itemize on their tax returns, and businesses that donate food to food banks and other charities.
We are in the midst of the giving season and the need is greater than ever. You can now give while claiming a deduction, thereby lowering your tax exposure as well.
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