New IRS Rule on Charitable Deductions

A new IRS rule allows taxpayers to deduct up to $300 in charitable contributions, even if you do not itemize your tax return.

Such contributions need to be made before December 31, 2020 to be eligible for a deduction on your 2020 tax return.

Recent changes in IRS rules dramatically increased the amount taxpayers can reduce their federal taxable income when using the standard deduction. The standard deduction for 2020 is $14,200 for single people, $28,400 for married couples, and $18,650 for head of household.

Because of these increased amounts for 2020, most family child care providers will use the standard deduction, rather than itemizing their taxes using IRS Form 1040 Schedule A.

Providers can still choose to itemize their taxes rather than choosing the standard deduction. If you itemize, you can claim charitable contributions (without limit), along with medical expenses, property taxes, mortgage interest, and other expenses. However, because most providers' itemized deductions do not exceed the standard deduction amounts, they end up not itemizing and therefore not being able to claim any charitable contributions. This has lead to the fear that many people will reduce their contributions to charitable organizations.

This new rule will allow providers to claim up to $300 in charitable contributions while using the standard deduction. Therefore, you can now save money on your taxes while supporting your favorite charitable organization in 2020. Just be sure to make your contribution before the end of December.

Tom Copeland - www.tomcopelandblog.com

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