En español | If you won't be itemizing your deductions on your 2020 federal tax return — and most taxpayers won't — be sure to take advantage of the special $300 charitable-giving deduction that Congress authorized this spring in response to the pandemic.
In the not-so-distant past, charitable donations could be deducted only by taxpayers who itemized their returns — and the threshold to itemize was relatively low. But the 2017 Tax Cuts and Jobs Act substantially raised the federal income tax standard deduction. As a result, the amount of itemized deductions now falls short of the new higher standard deductions for most. The Internal Revenue Service (IRS) says that over 87 percent of all federal income tax filers in 2018 — the latest data available — chose the standard deduction over itemizing deductions.
In 2020, however, taxpayers who claim the standard deduction also have a chance to deduct charitable donations. The Coronavirus Aid, Relief and Economic Security (CARES) Act gave taxpayers who take the standard deduction the ability to take an additional above-the-line $300 federal income tax deduction for qualified charitable contributions. ("Above-the-line” means that the deduction is above line 15 on the 2019 1040 tax form, and will reduce both your adjusted gross income and your taxable income — which, in turn, reduces the amount of federal income tax you owe.)
For the 2021 tax year, the charitable deduction is even better, at least for those who file a joint return. For 2020, the charitable limit was $300 per “tax unit” – meaning that those who are married and filing jointly can only get a $300 deduction. For the 2021 tax year, however, those who are married and filing jointly can each take a $300 deduction, for a total of $600.
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Cash donations to qualified charities
The $300 deduction is for donations made in cash, which includes currency, checks, credit or debit cards, and electronic funds transfers. You can't take the deduction for contributions of property, such as clothing or household items.
You must also make your contributions to qualified charities. Ask the charity whether it's a qualified organization per the IRS, or check online using this tool on IRS.gov. You can't deduct contributions of your time or services, or any part of a contribution from which you benefit, such as the purchase of Girl Scout cookies. You also can't deduct cash donated to help a specific individual, such as a person's medical expenses, even if the hospital itself is operated by a qualified charitable organization.
No itemization required
The $300 charitable deduction comes on top of the standard deduction, which is $12,400 for single filers in the 2020 federal income tax year and $24,800 for those married and filing jointly. People who are 65 and over or blind can claim an additional standard deduction of $1,300 ($1,650 if filing singly or as head of household). If you're 65 or older and blind, you can double your additional deduction.
In the 2021 tax year, the standard deduction is slightly higher because of inflation adjustments. Those filing single returns (or married filing separately) get a $12,550 standard deduction; those filing joint returns get $25,100. Those who are at least 65 years old or blind get an extra $1,350 (or $1,700 if using the single or head of household status).
If you itemize your tax return, you can't take the $300 CARES Act deduction.
The special tax deduction was made to help charities as well as taxpayers. “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,” IRS Commissioner Chuck Rettig said in a statement. “We encourage people to explore this option to help deserving tax-exempt organizations — and the people and causes they serve."