How the CARES Act is making donations count extra this year
People who donate to qualifying nonprofits before the end of the year can take advantage of added tax benefits thanks to the CARES Act, even if they do not itemize.
That is because the government knows, this year, nonprofits, such as Project Help of Naples, are hurting.
This year, the crisis center opted to host its gala auction online instead of in person.
Eileen Wesley, the executive director at the center, said the online format was less competitive. People weren’t watching others outbid them from across a room, and their bottom line showed it.
“That [gala] usually brings in between 30% and 40% of our budget,” Wesley said. “This year it only brought in about 18%.”
What are the benefits?
If a person takes the standard deduction, they can write off up to $300 in cash donations to eligible non-profits.
The number is the same for those joint filing.
If a person is itemizing, they can deduct cash gifts up to 100% of their adjusted gross income. Last year, it was 60%.
Charles Massie, a certified public accountant and financial planner, says physical donations, such as toys or food, do not count.
“It has to be cash, credit card, debit card — that type of thing,” Massie said.
What do I need to file?
Massie said to keep a paper trail. If several donations were made, each receipt is needed.
If the donation is a couple of hundred dollars, you might need more evidence.
“They need to get a letter from the organization that proves they did donate the money,” Massie said.
Individuals can search on the IRS website to see what organizations qualify.
RESOURCE: IRS – Charitable Contribution Deductions