Here’s how to get this year’s special charitable tax deduction

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So this year the government has offered an added incentive for Americans to donate to charity.

As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, lawmakers created a special special deduction to encourage other Americans with cash to make donations this year.
The deduction, which must be made by December 31 to account for fiscal year 2020, applies to taxpayers who make the standard deduction on their federal tax return. The IRS estimates that more than 87% of taxpayers now take the standard deduction.

Normally, only retailers can claim their charitable contributions, as the standard lump sum deduction (currently $ 12,400 for single applicants; and $ 24,800 for married applicants) is intended to cover most deductions.

But this year, in addition to taking the standard deduction, you can also make a deduction for cash contributions of up to $ 300, as long as you donate that money before December 31 (Note: does not apply to non-monetary contributions such as now clothes or food.)

Although the IRS does not require the presentation of receipts with your return, be sure to keep a record of the money you donate. “Make sure you document it. Keep your cash donation receipts in case they ask you later,” said Kathy Pickering, H&R Block’s tax director.

If you make a one-time contribution of $ 250 or more to a charity or nonprofit, get written recognition of your donation from the organization, Pickering said. If you make donations of less than $ 250 to any group, a canceled check or a bank or credit card statement proving proof of payment should suffice.

And if you make contributions through an employer-sponsored donation campaign in which your donation is deducted directly from your payroll, your payroll can serve as proof.

Another note: single or married people filing jointly can deduct up to $ 300 on their returns, but married taxpayers who file separately can only deduct up to $ 150 each, Pickering said.

What will you save

Taking the deduction will, of course, reduce your tax burden.

According to H&R Block, the deduction would reduce the tax bill by $ 36 (12% x $ 300) for someone who is between 12% tax (which applies to applicants up to $ 40,000 and married couples reaching $ 80,000). )

For someone 22%, that amount goes up to $ 66.

But more than the money you save, any tax-deductible contributions you can make can help a lot to charities (especially the smaller ones and locals) that continue to be a lifesaver for so many who need it this year.

Nearly three-quarters of Charity Navigator-qualified nonprofits reported suffering financially this year, while more than half saw demand increase and more than half said they had to cut back on programs.
Looking to the future, Covid’s Congress-approved relief package Monday night includes a one-year extension of the new deduction for non-distributors. Therefore, it will also be in force for 2021, when the needs of those affected by the pandemic are likely to be equally great.

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