Three Things About That Special Charitable Contribution Deduction

For 2020 only, we have a special charitable contribution deduction, allowing up to $300 for those who don’t itemize. This allowance doesn’t follow the usual rules, though. Here are three things you’ll want to know about this charitable deduction.

Cash, not trash

The regular charitable contribution deduction you claim when itemizing includes not only cash contributions, but also the value of clothing, furniture, cars and other items you donate to qualifying charities. Taxpayers who don’t itemize can claim this special deduction only for cash. For this purpose, cash donations include amounts contributed by writing a check or putting a donation on a charge card.

$300 limit

The limit on this charitable deduction for non-itemizers is $300, even if your generosity went to greater heights. There has been some confusion about how the limit applies to married couples, with some reputable sources suggesting incorrectly that they may claim a deduction of up to $600 on a joint return. It would have made sense for Congress to allow the larger amount on joint return, but this is not what it did. The same $300 limit that applies to a single taxpayer applies also to a joint return. (The Joint Committee on Taxation says this in footnote 76 on page 22 of this document.) I’m told IRS will make this clear in the final version of the relevant forms or instructions.

Charitable contribution recipients

You can claim this deduction for charitable contributions to the kinds of organizations where most of us ordinary folk donate. If your money goes to a private foundation or donor-advised fund, though, you’ll need to itemize to claim a deduction. Suggestion: give to some organization that provides relief relating to the covid crisis or the accompanying financial crisis, or where the organization itself is struggling because of the crisis. After all, that’s why Congress is allowing the deduction this year in the first place.