The Internal Revenue Service (IRS) is reminding taxpayers about a temporary tax break that will allow more people to deduct up to $300 in donations to qualifying charities this year.

Taxpayers who make cash donations of up to $300 before December 31, 2020, are now eligible for a charitable deduction when they file in 2021 – even if they don’t itemize. As part of the CARES Act, the special $300 deduction is available to taxpayers who choose to take the standard deduction, rather than itemizing their deductions.

Above-The-Line Deductions

Those kinds of deductions are sometimes called “above-the-line” deductions, or adjustments to income, since they come off the top, lowering both adjusted gross income and taxable income. Assuming that the IRS doesn’t make further changes to Form 1040 before next filing season, you’ll see the deduction on the front page of your tax return at line 10(b):

Tax form with charitable contributions line circled

While there have been some questions about Congress’ intent, the most recent IRS instructions indicate that the deduction is limited to $300 – even for married couples.

Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify for this new tax deduction. In tax-year 2018, the most recent year for which complete figures are available, more than 134 million taxpayers claimed the standard deduction, just over 87% of all filers.

“Our nation’s charities are struggling to help those suffering from COVID-19, and many deserving organizations can use all the help they can get,” said IRS Commissioner Chuck Rettig. “The IRS reminds people there’s a new provision that allows for up to $300 in cash donations to qualifying organizations to be deducted from income. We encourage people to explore this option to help deserving tax-exempt organizations – and the people and causes they serve.”

You can confirm an organization’s charitable status by using the Internal Revenue Service’s (IRS’) online tool, the Tax Exempt Organization Search (TEOS). Additionally, most charities will post evidence of tax-exempt status on their website.

Cash Donations Defined.

For purposes of the deduction, cash donations are those made by check, credit card or debit card.

Cash deductions don’t include securities (stocks), household items, or other property (don’t worry those are, of course, still deductible if you itemize your deductions). Though cash contributions to most charitable organizations qualify, those made to supporting organizations and donor-advised funds do not.

Get A Receipt – Even For Cash.

Cash deductions, regardless of the amount, must be substantiated by a bank record (such as a canceled check or credit card receipt, clearly annotated with the name of the charity) or in writing from the organization. The writing must include the date, the amount and the organization that received the donation. You can claim a deduction for a contribution of $250 or more only if you have an acknowledgment of your contribution from the qualified organization. As a best practice, I suggest always asking for a receipt – almost any charitable organization worth its salt will happily offer you one. You don’t have to submit documentation along with your tax return but you need to be prepared to provide it at audit.

More Tips – And How To Nominate Your Favorite Charity

For more tips on charitable giving, click here.

And to nominate your favorite charity in this year’s 12 Days of Charitable Giving, click here.

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