As part of the U.S. Treasury’s ongoing COVID-19 (coronavirus) relief programs for taxpayers, the IRS has made temporary changes to the rules for deducting charitable contributions on federal tax returns.
Normally, taxpayers who itemize deductions on Schedule A can deduct cash charitable contributions up to a specified limit, usually 60% of their adjusted gross income (AGI). For 2020, however, qualified contributions may be deducted up to 100% of the taxpayer’s AGI. (For corporations, the 2020 deduction limit is 25% of taxable income.) Furthermore, qualified contributions above this raised limit may be carried over as a deduction for the next tax year.
To qualify for this limit suspension, a contribution must satisfy ALL of these requirements:
- It is a cash contribution (that is, a direct contribution of money, not other property)
- It is made to a qualifying charitable organization
- It is made during calendar year 2020.
Note that non-cash property contributions made in 2020 do not qualify for this limit suspension. However, these contributions may still be deducted up to the normal limits (typically 50% of AGI minus the amount of any deducted cash contributions).
A tax professional can help you determine if any of your 2020 charitable contributions qualify for the deduction limit suspension, and how to claim your full deduction if so. Call Us at (855) 205- 8486
The IRS also has a tool available for checking exempt organizations: https://www.irs.gov/charities-non-prof…/search-for-charities