Donate cash to charity, reduce your 2020 taxes! Thanks to the CARES Act nearly everyone can benefit this year. No need to itemize. Get the how to in today’s episode.
Just for year 2020, there’s a brand-new tax deduction for up to $300 of cash donations made to charity. This special deduction is only for taxpayers who do NOT itemize deductions, which likely includes you.
1. Make a donation of cash. Goods like used clothing or furniture given to a thrift shop do not count.
2. The organization you donate to must be an IRS tax exempt organization. Donations to friends and family, or random acts of kindness don’t count. The organization are donating to can confirm this for you, or you can look up the charity on IRS.gov.
https://www.irs.gov/charities-non-profits/tax-exempt-organization-search
3. You need to get a receipt. Most tax-exempt organizations will do this automatically for you, if not just ask for one.
This special 2020 tax credit for $300 of charitable donations is only available for taxpayers that DO NOT itemize. For taxpayers that DO itemize, there is also of special change for just 2020. Normally taxpayers who itemize can only deduct cash contributions up to 60% of your adjusted gross income. Any donation amounts over that can be carried over for up to five years and deducted later. The CARES Act lifts that 60% limit for 2020. There’s still a 100% adjusted gross income limit on ALL charitable donations, but there is now no specific limit for 2020 on CASH donations. Itemizers could donate all of their adjusted gross income in cash to a charity and deduct it for 2020.
If you have any questions or would like to suggest a topic for future podcast episode please reach out.
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email: katie@moneypilotadvisor.com
