Following special tax law changes made earlier this year, cash donations of up to $300 made before December 31, 2020, are now deductible when people file their taxes in 2021.

The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted last spring, includes several temporary tax changes helping charities, including the special $300 deduction designed especially for people who choose to take the standard deduction, rather than itemizing their deductions.

Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify for this new tax deduction. In tax-year 2018, the most recent year for which complete figures are available, more than 134 million taxpayers claimed the standard deduction, just over 87% of all filers.

Under this new change, individual taxpayers can claim an “above-the-line” deduction of up to $300 for cash donations made to charity during 2020. This means the deduction lowers both adjusted gross income and taxable income – translating into tax savings for those making donations to qualifying tax-exempt organizations.

If you are itemizing your taxes, individuals can deduct donations up to 100% of their 2020 adjusted gross income. For cash donations to donor advised funds, individuals can deduct up to 60% of their 2020 adjusted gross income.

The CARES Act allows corporations to take a tax deduction up to 25% of their 2020 adjusted tax income for contributions to qualifying charities. The new law temporarily lifts the limits from 10% of adjusted taxable income to 25% for 2020.

Required minimum distributions have been suspended for 2020 under the CARES Act. This allows retirees to potentially recover losses due to volatility in the stock market. A reminder that the SECURE Act passed last year changed the starting age for required minimum distributions from 70½ to 72.

You can still make qualified charitable distributions from your IRA starting at age 70 1/2. Checks must be payable to the charity and not to you, in order to reduce your tax consequences related to the withdrawal.

When you or your business contributes funds to promote and develop child care activities, you can get a 50% Colorado Tax Credit, in addition to your regular state and federal contribution deductions.  A contribution to Ability Connection Colorado’s CREATIVE OPTIONS for Early Childhood Education programs qualifies for the tax credit. Please consult with your tax advisor for more information.

If you need your Child Care Contribution Tax Credit Certification (DR 1317) for a gift made to Creative Options, please contact Terri Armstrong at 303-691-9339 or tarmstrong@abilityconnectioncolorado.org

Click here to read more about the Child Care Contribution Tax Credit (PDF).

As with all charitable contributions, please consult your tax specialist or accountant.