Giving Tuesday and (maybe) a Tax Break!

Today is Giving Tuesday!  While there are numerous reasons to give, an added incentive this year is you may get a tax break as well (even if you don’t itemize).  As part of the CARES Act, an “above-the-line” deduction of up to $300 was put into place for certain charitable donations made by Dec 31, 2020. The donations must be cash donations (cash, credit/debit card, check) and made to a qualified charitable organization. To check if an organization is a qualified charity, you can use the IRS Tax Exempt Organization Search Tool.  Taxpayers who take the standard deduction (which approximately 9 out of 10 taxpayers do) will be able to reduce their taxable income by up to $300 for such donations.  Taxpayers who itemize will not qualify for the above-the-line deduction, but can still include qualified charitable donations as part their itemized deductions (which are also expanded for 2020; more info here).  Be sure to follow the documentation rules for charitable deductions: You must have a bank record or receipt for all donations and, if $250 or more, a contemporaneous acknowledgement from the organization (see IRS Pub 526 for more detail).

Update: included in the Consolidated Appropriations Act of 2021, the above-the-line deduction has been extended to tax year 2021.  The maximum amount has also increased from $300 to $600 for taxpayers filing Married Filing Joint for 2021 (remains at $300 for 2020).

More information is available on the IRS website: IRS Newsroom: $300 tax deduction