It has been a whirlwind of a year. With the pandemic came financial instability for many individuals and businesses alike. Although we have all felt the impact at some point, not-for-profit organizations have been hit harder than others. Charitable contributions by individuals have been on the decline causing not-for-profits, who support our youth programs; abused and neglected children; animal welfare; and schools, to have a decrease in funds they receive for their normal operations.
To compensate for this, Congress included a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that allows taxpayers who do not itemize their deductions, to deduct $300 of qualified charitable contributions as an “above the line deduction,” regardless of filing status. To qualify, charitable contributions must be given to qualified not-for-profit organizations, which can be defined as any organization that qualifies as a public charity under Sec.170(b)(1)(A). (It is important to note, this code only states public charities as qualifying, and excludes supporting organizations or charitable remainder trusts.) For further understanding of qualified contributions to qualified organizations, one need only refer to IRS Publication 526, which gives taxpayers an extensive guide on charitable giving. Per this publication, a qualified contribution is defined as “giving money or property that is for the use of a qualified organization.” Some qualified contributions include, but are not limited to, the giving of money or property to churches and other religious organizations, war veterans' groups, federal, state, and local governments, and the Salvation Army. One important requirement to note, gifts over $250 in cash require written acknowledgement on a gift-by-gift basis. This new deduction only applies to cash contributions up to $300. Follow this IRS link, https://apps.irs.gov/app/eos/, to help you determine if your contributions are going to a qualified organization.
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