A large bill was unveiled on December 21 that would provide tax and direct spending relief for businesses and individuals affected by the coronavirus pandemic and extend dozens of expiring tax deductions, credits, and incentives. One of the reliefs that would be useful to individuals is the charitable donation deduction.
In 2020 there will be a universal deduction of up to $300 for cash gifts made by an individual directly to a charitable organisation. This deduction will apply to all taxpayers and includes those who do not itemise their deductions and claim the standard deduction. This legislation has been extended up to the end of 2021 and the deduction for married filing joint taxpayers has increased from $300 to $600. For those who will want to itemise their deductions this year and next, the usual limitation for cash gifts made to public charities will be suspended and a deduction of cash donations will be allowable of up to 100% of their AGI.
Please note that these changes only apply to cash contributions made directly to public charities and do not apply to contributions made to private foundations, donor advised funds or supporting organisations.