Getting a Tax Deduction for Donations is Easier this Year Thanks to the Pandemic Relief Program

The last few weeks of the year are traditionally when Americans are the most generous with their giving. And while 2020 is a year of almost unprecedented devastation, there’s a new incentive to make a donation to a charitable cause now—in addition to the pandemic itself—if you’re in a position to do so.

Under the CARES Act, part of the federal government’s pandemic relief program that passed in March, individual taxpayers can take a deduction of up to $300 for cash donations made this year when they file their tax return in the spring.

Previously, as a result of changes to the federal tax code in 2017, you could deduct charitable donations only if you itemized your personal deductions, rather than taking the standard deduction. Since those changes were instituted, the “vast majority” of taxpayers have taken the standard deduction, according to The New York Times. (For 2020, the standard deduction is $12,400 for single filers, and $24,800 for married couples filing jointly.)

The change simplified tax filing for many people, but it also removed a financial incentive for some to donate, and nonprofits have felt the pinch. For some, $300 may not sound like much to donate, but it can certainly make a meaningful difference, especially for nonprofits stretched thin by the demands of the pandemic.

This new “universal” deduction, which reduces your adjusted gross income by up to $300, will make it easier to receive a tax benefit for giving. There are, however, a couple of important qualifications. First, the donation must be in cash, or by check or credit card. Volunteer hours and donated good don’t qualify. And the donation must be made to a qualified, 501(c)(3) public nonprofit. Gifts to individuals and private groups aren’t eligible.

At the moment, the deduction is only applicable to the tax year 2020, but Congress does sometimes extend temporary tax provisions, and nonprofits would certainly like to see that happen here.

There’s also some question as to whether a married couple filing jointly would receive a $600 deduction. The IRS, according to The Times, has not yet made clear whether the law allows a $300 deduction per taxpayer or per tax return. Some experts have said it’s “reasonable” to assume it’s the former. For now, it’s best to file conservatively and deduct no more than $300 per return.

How you can help us

For the last 55 years, NORWESCAP has been helping to support low-income families and individuals across Northwest New Jersey. Today, as our region and country face the threat from COVID-19, that commitment is stronger than ever.

If you’re looking for opportunities to volunteer, donate materials, or otherwise support NORWESCAP’s work during this crisis, call MaryBeth Ringo at 848-459-5882 or email her at ringom@norwescap.org. Monetary donations may be made here.