- The Senate unanimously passed a $2 trillion relief bill to help ease the financial burden American workers and businesses are experiencing due to the coronavirus pandemic.
- The bill contains one provision that incentivizes Americans to help others in need: a new above-the-line charitable tax deduction.
- Beginning with 2020 tax returns, taxpayers will be able to claim up to $300 in cash contributions to charity as a deduction without itemizing.
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A $2 trillion stimulus package, the largest emergency relief bill in American history, passed unanimously in the Senate on Wednesday night.
The legislation will bring much needed financial assistance to American workers and businesses and bolster the economy amidst the fallout from the coronavirus pandemic. The bill still needs approval from the House of Representatives and a signature from the president before it becomes law.
The bill’s banner provision provides one-time direct payments of $1,200 to Americans who earned less than $75,000 according to their latest tax return, and reduced checks to those who earned less than $99,000 or $198,000 if married filing jointly. There’s also a $500 payment per child for parents.
But there’s another benefit outlined in the bill that incentivizes Americans who are in a position to help others in need: a new above-the-line charitable deduction. Taxpayers will be able to claim up to $300 in cash contributions made to a nonprofit charity this year as a deduction from their gross income if they take the standard deduction on their 2020 tax return. This deduction will ultimately reduce the amount of your income that’s taxable.
Usually taxpayers who want to claim charitable deductions need to itemize. Ever since the standard deduction amounts were increased under the 2017 Tax Cuts and Jobs Act (TCJA), fewer people have been able to itemize deductions. In 2019, the percentage of taxpayers itemizing their deductions fell by more than half, according to estimates from the Tax Foundation.
The coronavirus pandemic has impacted nearly every sector of American life, from healthcare to the restaurant industry. If you’re looking to donate, Charity Navigator has a list of the highly-rated charities currently responding to the crisis. Just make sure to keep all your electronic or paper receipts or have bank records showing the date and amount of your contribution.
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