Looking to make a donation to your favorite charity during the holiday season? This year, the IRS is going to give you a tax break for it (now that’s some good news!).
The CARES Act was passed in March 2020 in order to provide economic relief amidst the COVID-19 pandemic that swept across the nation. A key purpose of the bill was to stimulate not only the broader economy, but also charitable giving by individuals and corporations.
As a result, the bill provided an incentive for end-of-year giving as it relates to charitable giving and itemizing deductions. The CARES Act increased the adjusted gross income (AGI) limit for cash contributions for individual donors. In 2020, individual donors can deduct up to 100% of their AGI (it was previously 60%). Corporations also saw an increase in the AGI limit for cash contributions; corporations can deduct up to 25% of their AGI (previously 10%).
For those who don’t itemize their deductions, individual donors can claim up to $300 in deductions for charitable gifts made in cash in 2020.
How do I claim my deduction?
To claim this $300 non-itemized charitable deduction, individuals must have made qualified charitable contributions to qualified charitable organizations. To be a qualified charitable contribution, it must be made in cash. Cash is a bit of a misnomer, as cash contributions are considered “any contributions paid with ‘cash, check, electronic fund transfer, payroll deduction, credit card, debit card, etc.’” (So, yes, your donation through HelloFund counts 😉). Be sure to keep your receipt for documentation (a printed email works)!
To be considered a qualified charitable organization, the organization must qualify as a public charity (generally, a 501(c)(3). For further clarification, see the IRS’ Publication 526, Charitable Contributions and the TEOS for clarification.
Oh, and did we mention? The cut-off for this $300 deduction is December 31, 2020. So head over to your favorite charity’s End-of-Year campaign and help them reach their goal!
Need some ideas as to where to donate?
Check out some of our client’s campaigns below:
Partnerships for Children – https://app.hellofund.com/view/qEPGYD16
Foster Angels Toys for Teens – https://app.hellofund.com/view/k4wZRGw2
St. Austin Annual Fund – https://app.hellofund.com/SACS2020-21GODISLOVE
Hungry Souls – Feed a Family for the Holidays – https://app.hellofund.com/hungrysponsor
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