We have made it through the bulk of 2020 and as we begin to reflect on our year and look to the future, I want to share something good that came out of the CARES Act in March.
For the first time since the 1980’s, you can take a $300 deduction for charitable contributions even if you do not itemize your deductions.
There is, of course, one catch, the $300 above-the-line deduction is only for cash donations. Donations of household items or food do not qualify for the deduction.
I know when I donate money or other items it is not for the tax benefit; it is to support the good work of the receiving organization. I do not ask for receipts or total up the amounts and I am sure I am not the only one. Here are a few guidelines for deducting those generous donations:
First – ALWAYS verify the organization is a registered charitable organization. This can be done here. If you do not see your charity of choice listed or if they show up as revoked, reach out to the organization. The IRS has been behind all year and there maybe something in the works that is not updated in the system yet.
Second – Keep records. Check stubs and electronic payments can be tracked, but without a statement from the receiving organization acknowledging you did not receive goods or services for your donation, you open yourself up to challenge by the IRS. Rules for documentation can be found here.
Finally, just a personal note. While national charities do great work, I would encourage everyone to look around their community and see the good work that is being done on a local level. You may be pleasantly surprised by all the choices you have to support your community and bring about change.
As we finish up a year that has brought so much disruption, I encourage you to find something good in the chaos.
Check back in a few days for a weekly series on COVID impacts on tax planning and year-end.
Questions or Comments? You know where to fine me!