8056 / What general rules apply to charitable deductions?
Editor’s Note: The CARES Act made several changes designed to encourage charitable giving during the COVID-19 outbreak. For the 2020 and 2021 tax years, the CARES Act amended IRC Section 62(a), allowing taxpayers to reduce adjusted gross income (AGI) by $300 worth of charitable contributions made in 2020 and 2021 even if they did not itemize ($600 for married taxpayers filing joint returns).
Editor’s Note: Under normal circumstances, taxpayers are only permitted to deduct cash contributions to charity to the extent those donations do not exceed 60 percent of AGI (10 percent for corporations). The CARES Act lifted the 60 percent AGI limit for 2020 and 2021. In other words, cash contributions to public charities and certain private foundations in 2020 and 2021 were not subject to an AGI limit. Individual taxpayers could offset their income for 2020 and 2021 up to the full amount of their AGI, and additional charitable contributions could be carried over to offset income in a later year (the amounts are not refundable). The corporate AGI limit was raised to 25 percent (excess contributions also carry over to subsequent tax years).
An individual may deduct certain amounts for charitable contributions.1 The amount of a contribution of property other than money is generally equal to the fair market value of the property.2 However, under certain circumstances, the deduction for a gift of property must be reduced; see Q 8073. For guidelines concerning the determination of fair market value, see Q 8057.