Many of you generously support the WDA Foundation as a charitable extension of your career. You make a donation because you know that the Foundation will use your gift to support the dental profession and bring improved oral health to those in need.
During this unprecedented year, many nonprofits, including the WDA Foundation, have found themselves in a difficult situation. Donations are universally down as the population struggles to preserve a bit of normalcy, so many nonprofits have found it necessary to cut back on essential projects and services.
To help encourage charitable giving in 2020, the CARES (Coronavirus Aid, Relief, and Economic Security) Act has provided several key changes to 2020 charitable contribution rules that impact both those who itemize deductions and those who take the standard deduction on their taxes.
Previously, a taxpayer was required to itemize deductions in order to write off charitable giving when filing taxes. According to the IRS, more than 14 million households took this tax break when donating to charity in 2018. Although this deduction was well used, those who took the standard deduction found themselves unable to receive a tax break for charitable giving.
This year, due to the CARES Act, if you use the standard deduction, you can claim up to $300 in donations ($600 for a married couple filing jointly) when filing your 2020 tax return.
For those who itemize, cash charitable deductions had been limited to 60% of adjusted gross income. For contributions made during calendar year 2020, filers may deduct cash charitable gifts up to 100% of adjusted gross income.
To claim these deductions, a record of the donation is required. Acceptable records include a receipt, letter of acknowledgement or other written communication (such as an email) from the nonprofit. The written record must include the organization’s name, the amount of the donation and the date of the donation. Other acceptable forms of proof may include a bank statement, a cancelled check or a credit card statement.
For more information on these and other changes related to the CARES Act, please consult your independent tax advisor, financial advisor or attorney.