Even in the difficult economic climate brought about by the ongoing pandemic, Gallup reports that 73% of adults living in the United States have donated cash to a charity in the past year. Whether you donated cash or something else, your generosity may reward you when you prepare your federal taxes.

In order for your charitable donations to help you out on your federal taxes, you must have donated to a qualifying charity. Luckily, the Internal Revenue Service makes finding qualifying nonprofits a breeze by maintaining a Tax Exempt Organization Search tool on its website. If you donate to one or more of the eligible charities included in the IRS’s database, you’ll be able to deduct at least a portion of your monetary donation on your federal taxes.

The IRS gives charitably oriented taxpayers several ways to lower their adjusted gross income and/or their taxable income on their federal returns. The key to taking advantage of any or all of these opportunities is to hold onto proof of your donations. If you donated money, keep a bank statement, canceled check, or credit or debit card receipt. People who donated property worth more than $250 should keep the receiving charity’s written acknowledgment of their gift.

The CARES Act passed in 2020 included some temporary tax changes at the federal level, including a special provision that allows people who donated cash to a qualifying charity and don’t itemize their deductions to take a $300 deduction from their AGI on their 2020 federal returns. If you’re eligible for this deduction, it will lower both your AGI and your taxable income.

If you have donated stock or another financial asset you held for one year or less to a charity like our Quincy, Ill. foundation, you can deduct the amount you paid for the asset on your federal return. If the asset appreciates while you owned it, you have to report the gain on your taxes.

Depending on your situation, you may find that your charitable donations account for a large amount of your income for 2020. Here is the breakdown of what you can deduct based on the type of donations you made to qualifying nonprofits:

• Cash: Up to 100% of your Adjusted Gross Income (AGI)
• Property: Up to 30% of your AGI
• Long-term securities: Up to 20% of your AGI
• Vehicles: Up to the amount the charity sells the vehicle for. If a qualifying charity decides to use a vehicle you donated instead of selling it, you may deduct the vehicle’s fair market value on your federal return.

While it’s too late to make a tax-deductible monetary donation in Quincy, IL to a qualifying charitable foundation for 2020, it’s the perfect time to consider making nonprofit donations that can benefit you when you file your 2021 tax return. See what your gift can do when you donate to the Blessing Foundation now!