As you plan your year-end charitable donation, remember that the CARES Act passed in late March instituted a provision allowing people to deduct $300 for charitable contributions. Here are the details:
- If a person is married and filing jointly, their deduction is still limited to $300. (There has been some debate on whether the law can be interpreted to say $600 for filing jointly, but this article clarifies why it is capped at $300 for joint filers.) Taxpayers can take this universal deduction no matter whether they itemize or take the standard deduction on their taxes.
- Deductions under the CARES Act must be in cash (including checks and credit card payments) and given to a 501(c)(3) public charity. Contributions to non-operating private foundations, support organizations and donor-advised funds don’t fall under this new deduction. Because the CARES Act deduction is a universal above-the-line deduction, a donor can list their contribution as an adjustment to income on their taxes.
In short, with the CARES Act, if someone donates up to $300 in cash to a qualified organization, their adjusted gross income will be reduced up to $300.
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