As our year of the global pandemic of 2020 ends the IRS has allowed a special one-year-only tax deduction for cash contributions up to $300 to qualifying charities. With so many in need this year, there are a multitude of charities that could use a little extra help and would indirectly benefit from this special deduction.
In prior years, charitable contributions could only be deducted if you itemized. Thanks to the Coronavirus Aid, Relief and Economic Security Act (CARES), enacted by Congress last spring, people who take the standard deduction rather than itemizing, now have the opportunity to take advantage of a special deduction up to $300 for charitable contributions made during the year. This donation must be in the form of cash rather than such items as “clothing or household goods”.
The deduction lowers both adjusted gross income and taxable income—translating into tax savings for those making donations to qualifying tax-exempt organizations.
The IRS warns that the charity must be eligible for tax-deductible donations. To confirm, click here to search the eligibility of the charitable organization.
Contribution Deadline
Be sure that contributions are made prior to the end of the year. All checks mailed to a charity must be postmarked by midnight on December 31, 2020. Donations made with a credit card are deductible as of the date the account is charged. And keep good records so that your generous donation will be allowed by the IRS. Get a receipt for your donation or acknowledgment letter from the charity before filing your tax return.
Take advantage of this special tax deduction. Our non-profit community will benefit greatly from your generosity during this challenging year.
Should you have any questions or want additional information, give Felsing LLC a call at 407-412-9299 or by email at info@felsingcpa.com.
Source: IRS COVID Tax Tip 2020- 179, December 14, 2020; Edward T. Killen, IRS CL-20-07, December 1, 2020; Jill Schlesinger, Jill on Money
