Everything You Need to Know about How the CARES Act Impacts You.
The new $300 deduction is different from your regular charitable contribution deduction. Those who itemize their deductions have always been eligible to claim their charitable contribution deduction. The deduction reduces taxable income after the donor’s adjusted gross income (AGI) has been calculated. Note: your AGI determines your eligibility for certain tax breaks. The deduction typically allows a deduction of up to 60 percent of your AGI. The NEW $300 deduction from the CARES Act is designed to all those who don’t itemize their deductions. The IRS applies it when calculating your AGI. Simply put, if you donate up to $300 in cash to a qualified organization, your AGCI will be reduced by up to $300 – and you can still claim the standard deduction.
Can You Take the $300 Deduction If You Itemize Your Deductions?
The IRS doesn’t want you double-dipping so the answer is no. You will still claim all of your charitable donations on your Schedule A.
The CARES ACT Does Affect Your Regular Charitable Contributions Deduction.
For those who are very philanthropic, the CARES Act raised the bar for the deductible amount of donations for those itemizing deductions. It is now up from 60% to 100% of AGI. In theory, you could donate your entire year’s income and end up with no taxes owed.
You Are Encourage to Give and Get a Tax Deduction
The Government is now making so every taxpayer can get a tax break for their generosity. Take advantage of this opportunity to see your tax liability go down while helping your favorite nonprofit.