Special $300 Tax Deduction Makes It Easy to Be ‘Santa’ for Charities

donation, charitable donation, $300 tax deductionThe Internal Revenue Service is highlighting a special new provision that allows taxpayers to deduct up to $300 in donations to qualifying charities made before December 31, 2020.

Even those who don’t itemize will be able to easily take the deduction when filing their taxes in 2021.

The measure is among the temporary tax changes designed to help charitable organizations that are part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring.

The special $300 deduction is designed especially for the nearly 90 percent of taxpayers who take the standard deduction, according to the IRS. These taxpayers will be able to claim an “above-the-line” deduction of up to $300 for cash donations to qualifying tax-exempt organizations. Above-the-line means the deduction lowers both adjusted gross income and taxable income, which translates into a tax savings.

“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 news release. “We encourage people to explore this option to help deserving tax-exempt organizations – and the people and causes they serve.”

“Western Connecticut is filled with wonderful tax-exempt organizations whose dedicated staff and volunteers work tirelessly on a wide range of important missions, ranging from health care and emergency services to sheltering and feeding the homeless and brightening our spirits with the gift of music or opportunities to safely get out of the house and enjoy nature,” said Cramer & Anderson Partner Dolores “Lorry” Schiesel, whose practice areas include Estate Planning and Elder Law. “We work with some of these nonprofits, and admire and personally help support the efforts of many others.”

Cramer & Anderson attorneys assist tax-exempt organizations with legal matters, serve on boards, and also participate in their efforts as volunteers. Below are some of charitable organizations we work with, including links to information on donating:

The IRS reminds taxpayers to use the special Tax Exempt Organization Search (TEOS) tool on IRS.gov to make sure an organization they want to support is eligible for tax-deductible donations. The IRS advises consulting Publication 526, Charitable Contributions, and the TEOS for more information on qualifying donations. Additionally while contributions to most charitable organizations qualify for the deduction, contributions given to supporting organizations and donor-advised funds do not qualify, for example.

Taxpayers should also note that cash donations include those made by check, credit card or debit card, but not securities, household items or other property.

Taxpayers claiming a charitable contribution deduction are required to keep records, including obtaining a receipt or acknowledgement letter from the charity, as well as retaining a cancelled check or credit card receipt.

Other provisions of the CARES Act designed to help charitable organizations include higher contribution limits for corporations, and for businesses that give food inventory to food banks and other eligible charities. Information about the coronavirus-related tax relief provisions can be found online at IRS.gov/coronavirus.

Working With Cramer & Anderson

Our attorneys and staff are working in our offices, where proper sanitation and social distancing measures remain strictly observed amid the COVID-19 coronavirus, as well as remotely.

Attorneys are available as usual by phone or email, and are also connecting with clients using technology such as Zoom. For more information, see the firm’s website or call the flagship office in New Milford at (860) 355-2631. Other regional offices are located in Danbury, Ridgefield, Kent, Washington Depot, and Litchfield.