'Tis the Season of Giving (With Some Help From the IRS)
A new tax break was approved by lawmakers in March that was designed to encourage more donations to charities. This measure is a part of the CARES (Coronavirus Aid, Relief and Economic Security) Act, and it allows taxpayers to deduct $300 from their taxable income when they file their 2020 tax returns in 2021 - if they make cash donations of upto $300 before December 31st, 2020. The CARES Act also includes other temporary provisions to help other charities like higher charitable contribution limits for corporations, individuals who itemize their deductions and businesses that give food inventory to food banks and other eligible charities.
IRS Commissioner Chuck Rettig stated that the nation's charities are struggling to help those suffering from the Coronavirus and that many deserving organizations can use all the help that they can get. He stated that they encourage people to explore this option and help deserving tax-exempt organizations, the people and causes they serve.
The IRS reminded people to check its special Tax Exempt Organization Search tool to make sure that the organizations they are donating to are eligible for tax-deductible donations. Cash donations include: check, credit or debit card. They do not include securities, household items or other properties. Check Publication 526 and the TEOS as contributions to most charitable organizations qualify but those made to supporting organizations and donor-advised funds do not.
Further, everyone donating to charity needs to keep a record of it- usually by obtaining a receipt or acknowledgement letter from the charity before filing the return and retaining a cancelled check or credit card receipt.
For more information about these and other tax relief provisions, visit Landmark Tax Services and talk to any of their tax filing and financial planning experts.