Cash donations up to $300 that were made to qualified charitable organizations in 2020 are now tax deductible, even if you don’t itemize your deductions. The Coronavirus Aid, Relief and Economic Security Act (CARES Act) that was passed in March 2020 included the tax law change to help support charities. This is a small tax deduction but is worth mentioning.

Charitable contributions can normally only be deducted by taxpayers who itemize deductions on their return.  The 2017 Tax Cuts and Jobs Act increased the standard deduction amount so much that most Americans now take the standard deduction rather than itemizing. Now, taxpayers who claim the standard deduction also have an opportunity to deduct up to $300 in charitable donations. The deduction is only available to taxpayers taking the standard deduction, with the $300 limit applicable to all returns regardless of filing status.  Additionally, only cash contributions qualify for the deduction.  Cash contributions are any contributions paid with cash, check, electronic fund transfer, credit card, payroll deduction, etc.  Contributions of noncash property do not qualify for this deduction.

For 2021, a similar deduction for taxpayers taking the standard deduction was made available by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.  The $300 deduction limit will remain for most filing statuses, but for Married Filing Jointly taxpayers the limit will increased to $600.

Make sure to include your donations on your tax return even if you take the standard deduction! Review Publication 526, Charitable Contributions to confirm your cash donation qualifies for the deduction.

 

This blog is provided by Windward Private Wealth Management Inc. (“Windward” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. No portion of this blog is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Certain information contained in the individual blog posts will be derived from sources that Windward believes to be reliable; however, the Firm does not guarantee the accuracy or timeliness of such information and assumes no liability for any resulting damages.

Windward is an SEC registered investment adviser. The Firm may only provide services in those states in which it is notice filed or qualifies for a corresponding exemption from such requirements. For information about Windward’s registration status and business operations, please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.