One of the lesser-known benefits of the CARES act is the tax deduction this year for cash donations to not-for-profit organizations. Normally, you could only deduct charitable contributions if you itemized on Schedule A. Now, if you elect the standard deduction in 2020 you will get to deduct $300 “above the line” meaning a direct reduction of your adjusted gross income (AGI)! So, if you have a favorite not-for-profit out there who could probably use some help right now it is a great year to donate cash and reduce your tax bill. You cannot double-dip; if you itemize you do not also get the above the line deduction. However, you can now deduct schedule A donations up to 100% (up from 60%) of your income.
During these difficult times, there are a lot of people in need. If you have some extra to spare don’t forget your favorite charity. You can also get a tax benefit for the donation too! If you have any questions or want to discuss your tax plan this year please reach out to me.
If you want to make sure that a not-for-profit is legitimate you can search the IRS Tax Exempt Organization Database.