Deduct Charitable Donations in 2020 – Without itemizing

Background:

Since tax year 2018, the standard tax deduction has been $12,000 if your filing status was single and $24,000 for joint couples.  (Deductions are adjusted upward each year for inflation.)  In 2020, it is $12,400 for singles and $24,800 for married joint filers.  This is at least double what it was in 2017 and earlier.  With these higher standard deductions, many people do not itemize their tax returns, but just take the standard deduction.

New in 2020

In tax year 2020, it will still be advantageous for most people to take the standard deduction ($12,400 if single and $24,800 if joint).  However, the CARES Act allows you to now include a limited amount of charitable deductions without itemizing your return.  You will be able to write off up to $300 in cash donations to qualifying charities ($600 for joint filers).  And you will not have to itemize your deductions to take this charitable deduction.  To enter these contributions, there may be some new line-items on the 1040 tax return.

2020 Strategy

Here is what this means, with regards to your 2020 tax year that you file in 2021.

  • Take the standard deduction, unless you gave big bucks or have a lot to itemize.
  • If you have receipts, you can claim up to a $300 deduction for donations to charities, without itemizing your tax return.
  • If filing jointly, you can claim up to $600.
  • Everyone gets a waiver on taking the Required Minimum Distribution (RMD) in 2020.  See RMD 2020 Rules – Updated .  Therefore, giving to charities directly from your IRA in 2020 will not be as helpful as it was in 2019 and will be in 2021.
  • One strategy is to hold off giving large sums in 2020; give twice as much in 2021, and be sure to donate the $$ directly from your IRA, not with a personal check.  If done correctly, it counts as part of your RMD, up to $100,000.  (Your gift must go directly from your IRA to the charity, not from you to the charity.)

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