How Will the Next Tax Year Be Different?

by | Apr 14, 2020 | Uncategorized

Usually, only those who itemize their deductions qualify for the charitable contribution deduction. The deduction reduces taxable income after the donor’s adjusted gross income (AGI) has been calculated. (Your AGI determines eligibility for certain tax breaks.)

The deduction also usually only allows taxpayers to deduct donations that are up to 60% of their AGI.

The new $300 deduction from the CARES Act, on the other hand, is specifically for those who don’t itemize their deductions and would typically not get any tax benefit for donations. Since it’s considered an above-the-line deduction, the IRS applies it when calculating your AGI.

In plain English, if you donate up to $300 in cash to a qualified organization, your AGI will be reduced by up to $300—and you can still claim the standard deduction.

If you have any questions, please contact Juliana Knox at 617-909-1952.