Taxpayers who do not itemize their deductions can claim as much as $300 in charitable contributions for calendar year 2020, thanks to a temporary change to the tax code.
Typically, taxpayers who itemize their deductions on Schedule A of Form 1040 can deduct donations to religious organizations, educational institutions, and other charities. Most years, this deduction is only available to people who itemize deductions, not to those who take the Standard Deduction.
However, in 2020, lawmakers temporarily suspended long-standing rules governing charitable donations, in favor of new temporary rules that permit taxpayers who don’t use Schedule A to claim as much as $300 for charitable contributions.
If you are taking the Standard Deduction in 2020, but you still want to claim donations, you can enter them on Schedule 1 of Form 1040 (Additional Income and Adjustments to Income).
All tax filers should use Schedule 1 in 2020, because Schedule 1’s adjustments authorize write-offs that all filers can claim, regardless of whether they itemize or use the standard deduction. Contributions to traditional IRAs and other kinds of tax-deferred retirement plans are some examples, in addition to charitable donations.
In 2021, the rules will revert back, and Form 1040 will also revert back to the same version we had in 2019.
At the moment, it’s not clear whether the $300 deduction for taxpayers filing single will double to $600 for joint filers. We are waiting for the IRS to clarify this.
This new flexibility for deducting donations may be helpful to charities across the nation, as many nonprofits asked congressional leaders to increase the tax deduction for charitable contributions earlier this year.
So, what’s your plan for 2020? Are you itemizing your deductions, or are you planning to take the Standard Deduction? Either way you will be able to deduct some of your charitable contributions, so go ahead and donate to your favorite nonprofit, and make sure to keep the receipt.
If you need assistance with tax planning or filing your 2020 tax return, BNC Tax is here for you! Book a consultation with us today by using our appointment booking calendar, which you can find here.