When the Tax Cuts and Jobs Act doubled the standard deduction available to taxpayers, it also made it harder for people to deduct their charitable contributions. The Coronavirus Aid, Relief and Economic Security (CARES) Act added a new deduction for charitable contributions, which is available to any individual who does not itemize. The deduction is up to $300 for cash contributions made to qualifying charities.

  • This deduction only applies for individuals who do NOT itemize their deductions. If someone has enough deductions to itemize, they can already claim all of their charitable giving.
  • The deduction is up to $300 per tax return. It is not doubled for married individuals filing jointly.
  • The deduction is only for cash donations. Donating clothes or other goods is not eligible for this deduction.

While the benefit for this deduction may only be $30 to $100 for an individual taxpayer, it does create a new incentive for giving and may make some people reconsider making donations.

The IRS is also trying to raise awareness of this deduction and has released a new article with details about it: https://www.irs.gov/about-irs/special-tax-deductions-available-this-year-for-cash-donations-to-charities-irs-works-to-raise-awareness

Remember, charities are required to provide a written acknowledgement for any single contributions of over $250. I recommend providing an acknowledgement for all donations, as this helps the donors with their records and provides another advertising opportunity for the charity. The acknowledgement needs to include a statement confirming that no goods or services were provided by the organization. If any goods or services were provided, a description and estimate of their value must be included. For more details on substantiation and disclosure requirements for charities, please see IRS Publication 1771.

Happy Holidays,

David Hoover, CPA