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Don’t Overlook the $300 Tax Deduction Under the CARES Act

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With the passage of the 2017 Tax Bill that doubled the standard deduction, most taxpayers can no longer itemize their deductions and, therefore, they no longer get a federal tax break for charitable donations. But…. if you make cash contributions before December 31, you may still be eligible for a modest deduction, even if you don’t itemize.

The CARES Act enacted earlier this year included a one-time $300 “above-the-line” deduction for cash contributions to charity.  The provision was designed to encourage taxpayers to help charities, many of which are struggling to fulfill their mission during the coronavirus pandemic. 

NOTE: The deduction is based on your 2020 tax return, not per person, so the maximum a single person, a head of household or married couple who files jointly can deduct is capped at $300.

What Counts: 

  • Must be in cash (including checks and credit card payments).
  • Given to a 501(c)(3) public charity

What Doesn’t Count: 

  • Contributions of clothing and household goods (like Goodwill, St Vincent and Easter Seals) are not eligible.
  • Donations to donor-advised funds aren’t eligible.
  • Contributions to non-operating private foundations & supporting organizations don’t count either.
  • If you do itemize, you will still claim all of your charitable donations on Schedule A – no double-dipping or dividing allowed.

Recordkeeping:

This is not a standard write-off everyone can take. You still need to maintain documentation for the check/credit card donations made.  For donations under $250, you need a bank record, such as a cancelled check or credit card statement.  For donations that exceed $250, you should obtain a written acknowledgement from the charity that shows the date of the contribution, the amount, and states whether you received any goods or services in exchange for your donation. Now that COVID-19 has hurt so many financially, this provision should encourage more people to give, even in these trying times.

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