Ordinarily, charitable deductions are only available as an itemized deduction. When you file your federal taxes, you have an option to take itemized deductions or the standard deduction. The standard deduction in 2020 is $12,400 for an individual and $24,800 for a married couple filing jointly. In other words, even if you don’t have any itemized deductions, you can still claim the standard deduction. So, in order to itemize your deductions, you’d need more of the itemized deductions than the standard deduction to make it worthwhile to do so.
Let’s see how this works. Let’s say Mary is a single individual and she has an income of $100,000. She has $5,000 of state and local taxes and makes $6,000 of donations to charity. She has no other itemized deductions. Her total itemized deductions would be $11,000. However, if she chose the standard deduction amount of $12,400, she’d be better off. Even if Mary increased her charitable donations by $1,400, she’d still be just as well off taking the standard deduction because only then would her total itemized deductions equal the standard deduction of $12,400.
However, for the tax year 2020, you can take an “above-the-line” deduction of up to $300 for donations of cash made to a public charity. That means that, if you don’t itemize and take the standard deduction amount, you can still claim a deduction of up to $300 for donations to charity. The donations must be of cash and must be to public charities, like your church or your alma mater.
Let’s look again at Mary’s situation. She made $6,000 of donations to charity. If $300 of those donations were of cash to a public charity, she could take those donations as an above-the-line deduction and still claim the standard deduction of $12,400 for 2020.
This special rule came from the “CARES” act which was Congress’ response to the pandemic to encourage more charitable giving. You can only take the above-the-line deduction if you don’t itemize. The maximum deduction is $300, whether you’re a single filer or a married couple filing jointly.
In the Bible, it’s said that “it’s more blessed to give than to receive.” Acts 20:35. Thanks to the availability of the $300 above-the-line charitable deduction this year, it’s easier than ever to get a charitable deduction when you give.
Stephen C. Hartnett, J.D., LL.M.
Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128