CARES Act Tax Deduction for Charity Donations
The holiday season is upon us, and for many, that means spreading joy by giving to others. Donating to this organization allows for the purchase of much needed baby formula and food during this time of year when food bank stock typically runs low. We encourage you to give to organizations that support causes you believe in, especially those serving our local community.
Giving back has perhaps never been as important as it has this year, as many have struggled and are still struggling from the physical and financial effects of COVID-19. Fortunately, there is a new piece of legislation in place designed to reward the charitably minded among us. Enacted earlier this year, the Coronavirus Aid, Relief and Economic Security (CARES) Act includes a special $300 deduction for those who take the standard deduction rather than itemizing.
Most taxpayers opt to take the standard deduction instead of itemizing, which means that most taxpayers have the opportunity to be rewarded for donating to charities, many of which are struggling financially this year. If you donate to qualified charities by the end of this year, you can deduct up to $300 from your 2020 tax bill. The deduction lowers both adjusted gross income and taxable income, which translates into tax savings for those making donations to qualifying tax-exempt organizations.
If you plan to donate to a charity but you aren’t sure whether it qualifies for the deduction as a tax-exempt organization, go to the IRS’ Tax Exempt Organization Search (TEOS) tool to verify. Once you donate, be sure to keep a copy of the receipt or confirmation to ensure adequate record-keeping of your donation.
This year, giving to charity means giving back to yourself as well.