A New $300 Tax Deduction Is Available…But Only For 2020!
Well, this year has sucked but with tax season just around the corner (dun, dun, dun), the government is looking to offer a helping hand...but just for 2020.
There is a special $300 charitable-giving deduction that you can write off that has been authorized by Congress.
This deduction does have to be "above the line" which means that you can deduct up to $300 on qualifying donations from your taxable income even if you claim the standard deduction.
Basically, if you donated to those in need during the COVID-19 Pandemic, you can write it off WITHOUT itemizing.
“They want people to support charities that are fighting the COVID fight,” said Jeremiah Barlow, executive vice president at Mercer Advisors.
However, there is a catch. You can only deduct cash donations. If you gave food, household goods or other non-monetary items, that cannot be counted towards the $300 tax deduction.
If you plan to itemize, then you can write off these donations.
This deduction solely means that it will lower your taxable income. It is not a dollar-for dollar reduction. (Would be cool if it was dollar for dollar, right?)
If you plan on utilizing this tax deduction, get a receipt or some form of proof from the charity that you can include when you file.
And remember, this is for 2020 ONLY! This deduction is available because of the CARES Act and it all expires December 31st.
It is not out of the question for this deduction to be available next year...but for now, I would act as if this is a one-time offer because it is being labeled as "possible" not "promised."
“I think the purpose of this would still be applicable in 2021,” Barlow said. “The CARES Act was meant to handle and help with the economic difficulties associated with what’s happening due to COVID, and that is expected to continue into 2021.”
An additional $300 off your taxable income....not the worst news in the world.