The Tax Cuts and Jobs Act significantly reduced the number of taxpayers who itemize deductions (meaning those who actually see a tax benefit for donations made) beginning with the 2018 tax year. Now, the CARES Act allows a partial “above the line” deduction for cash donations made to qualifying charities.
Limits on Donations
Taxpayers who do not choose to itemize deductions are able to claim up to $300 of charitable contributions this year. That amount is set, regardless of filing status (single, married filing jointly, etc.). There are a few rules to follow:
- The donations must be “cash donations” – meaning those paid by cash, check, credit card, electronic funds transfer, payroll deductions, etc.
- The donations must be made directly to the charitable organization
Planning to Give?
With a new tax benefit to donations, we’re expecting an increase in giving this year. If you’re planning to give, what do you need to know? While it’s a best practice to keep records of all charitable donations, to deduct an individual donation totaling $250 or more, you must have a written acknowledgment from the organization. Don’t worry about something formal; the thank you email you receive after donating is sufficient notice. Keep those on hand for your 2020 tax preparation.