Charitable Contributions

For 2020 and 2021, the CARES Act allows you to deduct qualified charitable contributions of up to 100% of your adjusted gross income, but not for donations made to donor-advised funds or educational institutions for which you receive event seating in return.

Donations of goods to charity are valued at their market value at the time of donation. You can’t claim the price you paid for the item.

The CARES Act also allows non-itemizers to deduct up to a $300 cash contribution to qualified charities in 2020. While the 2020 deduction is limited to $300 per tax return, in 2021, the deduction expands to allow joint filers to deduct up to $600.

Remember all donations of goods with a market value greater than $250 must have a receipt from the charity.

If you don’t itemize because your deductions are less than the standard deduction you might consider accelerating or bunching contributions for a number of years. For example, if you give $10,000 per year to a charity, bunch three years of contributions — $30,000 — into one year instead, then itemize the deduction on your tax return. Take the standard deduction in the other two years.

When donating to charity, ensure the charity is qualified by searching the IRS database. Only donations qualified by the IRS are eligible for tax deductions.