A Good Day to Give! With a $300 Tax Deduction
The Bottom Line:
CARES Act incentivizes giving with tax deduction
Up to $300 in deductions for qualifying donations
Designed for those taking the Standard Deduction
Using CARES to Care for Those in Need:
Giving Tuesday is a little brighter: The CARES Act makes it easier to give!
This has been a very difficult year for all of us. But especially as we continue into the holiday season — we always want to help others! The CARES Act allows for individuals to give to charitable organizations while receiving up to $300.00 in tax deductions.
Enacted last March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided assistance to hospitals, expanded unemployment, created the Paycheck Protection Program, sent stimulus moneys, and adjusted rules on early distributions from some retirement accounts (more on this soon!).
And a temporary provision helps lessen the burden on both those who want to give and deserving organizations. Thank you CARES!
What does this mean for giving?
It offers up to a $300.00 tax deduction to qualified individuals giving appropriate donations to eligible charities.
Do I need to itemize to deduct?
No, friend! This applies SOLELY to those taking the standard deduction—great news as this is Most Of Us. Also rad: it’s an Above-The-Line Deduction.
Oh GREAT!!….um…. what means these^^ interesting words?
Above-the-line deductions reduce your total income before you do anything else on your taxes—an “above-the-line” deduction factors into calculating your Adjusted Gross Income (AGI….::or::…the “Line”). Your AGI is an important way to assess your tax responsibilities and identify which credits may apply.
Tell me the good stuff: how do I give to those in need and receive this benefit?
An individual taking the standard deduction can check that their favorite charity is eligible for tax-deductible donations. They might then contribute a “cash donation."
#yikes...cash?
No need to raid Mom’s couch cushions! “Cash donations” include checks, credit & debit cards, etc..
Also — don’t donate **the couch** if you are looking to deduct – non-“cash” items aren’t eligible in this way.
And the organization most likely doesn’t need your Mom’s couch.
But we digress. A few things to keep in mind:
Keeping super smart & savvy records is always important but especially for charitable donations—a copy of your cancelled check/receipt of card payment, and acknowledgement of payment from the charity are legally necessary.
If you donate $15,649,082.03 you will be a hero but will not qualify for this deduction — the largest amount is $300.00. Also donating in the year 1659 won’t help — this temporary tax provision is from 2020 forward.
More stipulations re charitable contribution are here.
What’s the bottom line?
In a very difficult year for all of us, the CARES Act has made it easier for individuals to support the causes they believe in, and for charities to serve those in need. As we head into Giving Tuesday and this holiday season, make a plan if you want to support the underserved, ask your friendly neighborhood accountants if you need assistance, and we’ll all help each other have a good day — and an even better one tomorrow!