Year-end giving: $300 IRS tax deduction

The U.S. Internal Revenue Service recently sent a reminder about tax deductions for charitable contributions made in 2020.

Cash donations of up to $300 made this year will be deductible for individuals when they file their taxes in 2021 even if they don’t itemize on their tax returns.

So if tax payers decide to take the standard deduction, they still will be able to deduct up to $300 and lower their taxable income by that amount.

This change in the tax law was included in the Coronavirus Aid, Relief and Economic Security Act that was passed earlier this year.

This deduction is for contributions made by check, credit card or debit card but does not include donations of securities, household items, clothing or other in-kind gifts.

Two years ago, when the standard deduction was raised to $12,000 per individual or $24,000 per couple, many felt that this would result in fewer households contributing as there would be less incentive to itemize on tax returns.

In 2019, these deductions were increased to $12,200 and $24,400 respectively.

As these changes evolved, the BBB found results were mixed, with smaller charities experiencing donation reductions while larger ones saw growth.

Even if you did not have a chance to participate in Giving Tuesday on Dec. 1, you still have an opportunity to donate in 2020 and take advantage of this special $300 tax benefit.

We encourage donors to also take the time to visit to verify if the organization is a BBB-accredited charity and meets the 20 voluntary BBB standards for charity accountability.

The standards were developed to assist donors in making sound giving decisions and to foster public confidence.

They seek to encourage fair and honest solicitation practices, to promote ethical conduct by charities and to advance the support of philanthropy.

BBB Accredited Charities are those publicly soliciting charities that are tax-exempt under section 501(c)(3) of the IRS Code, that comply with the BBB standards and have provided documentation that they meet basic standards relating to:

• How they govern their organization

• The way they spend their money

• The truthfulness of their representations

• Their willingness to disclose basic information to the public.

If you have other questions on charity tax deductibility, see the latest version of IRS Publication 526, Charitable Contributions.

For inquiries regarding charities and charitable giving call the BBB at 1-800-222-1600.

Bobby Hansen is regional director for the Better Business Bureau Cedar Rapids office; (319) 365-1190.

Year-end giving: $300 IRS tax deduction