Optima Tax Relief Notifies Taxpayers how the CARES Act Changes Deducting Charitable Contributions
Whether you’re choosing to give back this holiday season or you’ve been donating to those in need the entire year, taxpayers need to know that due COVID-19 pandemic aid, their charitable donations may be tax-deductible. These deductions can help reduce the amount of taxable income that a taxpayer earns.
Optima Tax Relief takes a closer look at how the CARES Act changes the way you deduct your charitable contributions.
Prior to the CARES Act, charitable contributions could only be deducted if taxpayers itemized their deductions. Taxpayers who don’t itemize their deductions have the ability to take a charitable deduction up to $300 for cash contributions made to qualifying organizations.
Qualifying organizations that can be deducted are religious, charitable, educational, scientific, or literary in purpose.
The CARES Act currently suspends limits on charitable contributions and temporarily increases limits on contributions of food inventory.
Additional resources for people making donations:
How to locate qualifying tax-exempt organizations
In order to deduct charitable contributions, taxpayers must first do their research to find out which charities qualify as a charitable organization for income tax purposes.
Publication 526, Charitable Contributions
The publication details how a taxpayer is able to claim a deduction for a charitable contribution. The following is covered:
- How much taxpayers can deduct.
- The types of records they must keep.
- How to report contributions.
Publication 561, Determining the Value of Donated Property
Donating the fair market value of a property can typically be deducted by a taxpayer. The publication assists taxpayers determine the value of their property.
Form 8283, Noncash Charitable Contributions
Form 8283 must be filed in order to report noncash charitable contributions if the amount of the deduction is more than $500.
Schedule A, Itemized Deductions
This schedule is for taxpayers that are deducting donations on a Schedule A. The instructions on the form provide line-by-line for completing it.