Charitable Deductions Changes in the CARES Act

Usually, we save all of our charitable donation receipts during the year and add the information to our tax software.  Prior to the tax year 2020, your charitable donations would only have an effect on your tax liability if you “itemized” your deductions.  If you used the standard deduction of $12,200 for an individual, or $24,400 for a married couple in 2019, your charitable donations did not reduce your taxable income.

On March 27, 2020, after the signing of the CARES Act, individuals are now allowed a $300 “above-the-line” deduction for charitable donations to 501(c)(3) organizations for the 2020 tax year.  What does this mean?  This means that for your 2020 tax return, you will be able to deduct up to $300.00 of cash contributions to a charitable organization, whether you itemize your deductions or not.

Here’s a practical example. During the weekend of July 24 to July 26, I decided to run 4 miles every 4 hours for a total of 48.6 miles in 48 hours.  To raise awareness for homeless pets at the Happy Trails Animal Rescue, I posted on my social media pages that I would donate $1 per mile to Happy Trails.  Even if I use the standard deduction on my 2020 tax return, I can still deduct this $48.60 donation from my income.  Keep this in mind as you make your charitable donations this year.