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The CARES Act has changed how contributions impact your bottom line

Posted on December 6, 2020

With lots more people doing lots less this past year, many taxpayers made more significant charitable deductions. The CARES Act also made deducting charitable contributions a little simpler.

Here’s how:

Previously, charitable contributions could only be deducted if taxpayers itemized their deductions. Not so this year.

In 2020 taxpayers who don’t want to itemize deductions may take a charitable deduction of up to $300 for cash contributions donated to qualifying organizations.

The small print: To meet this CARES Act deduction, qualifying organizations are limited to institutions that are religious, charitable, educational, scientific, or literary.

Importantly, The CARES Act also suspends limits on charitable contributions and temporarily increases limits on contributions of food.

Make sure your charitable donations are tax deductible:

When in doubt, check. Head to IRS.gov Tax Exempt Organization Search. This IRS search tool will provide you with:

  • Definitive information about an organization’s federal tax status and filings.
  • Confirmation that an organization is tax-exempt and eligible to receive tax-deductible charitable contributions.
  • The ability to determine whether if an organization had its tax-exempt status revoked.
  • Organizations are searchable by legal name or a doing business as name on file with the IRS.
  • The search results are sortable by name, Employee Identification Number, state and country.

 Here are additional helpful resources for those making donations:

Publication 526, Charitable Contributions
This publication explains how taxpayers claim a deduction for charitable contributions. It goes over:

  • How much taxpayers can deduct.
  • What records they must keep.
  • How to report contributions.

Publication 561, Determining the Value of Donated Property
Taxpayers generally can deduct the fair market value of property they donate. This publication helps determine the value of donated property.

Form 8283, Noncash Charitable Contributions
Taxpayers must file Form 8283 to report noncash charitable contributions if the amount of this deduction is more than $500. The instructions for this form walk taxpayers through how to complete it.

Frequently asked questions: Qualified charitable distributions
Taxpayers age 70 ½ or older can make a qualified charitable distribution from their IRA – up to $100,000 – directly to an eligible charity. It’s generally a nontaxable distribution made by the IRA trustee to a charitable organization. A QCD counts toward their minimum distribution requirement for the year.

Enjoy this holiday season of giving to your favorite authorized charities – from all of us at Teipen CPA Group.