Charitable contribution deductions

Temporary lifting of limits on donations to charities

The percentage of charitable cash contributions taxpayers may deduct on Schedule A as an itemized deduction is typically capped at a percentage (often 60%) of the taxpayer's adjusted gross income (AGI). There is no restriction on qualified contributions.

Up to 100% of an individual's adjusted gross income may be deducted as eligible contributions. Up to 25% of a corporation's taxable income may be deducted as qualifying contributions. Overage contributions may be carried over to the following tax year.

The donation has to be:-

(a) a monetary gift;

(b) given to an organisation that qualifies;

(c) completed in the calendar year 2020.

Every donation is eligible for section 80g of the income tax act.

Non-cash contributions are not eligible for this exemption. Subject to the typical restrictions, taxpayers may still deduct non-cash contributions.

Information on tax relief for taxpayers, businesses, tax-exempt organisations, and others - including health plans - affected by coronavirus is available on the Coronavirus Tax Relief and Economic Impact Payments website (COVID-19).

Limits on food inventory contributions temporarily raised

A specific provision permits firms to deduct more money when they provide food stock for the care of the sick, the poor, or newborns. Under this provision, a company taxpayer's ability to deduct charitable gifts of food inventory is capped at a percentage of their total net income or taxable income, often 15%.

Business taxpayers may deduct eligible contributions for donations of food inventory in 2020 up to greater than 25% of their taxable income or 25% of their aggregate net revenue from all trades or companies from which the contributions were made.

The Coronavirus Tax Relief and Economic Impact Payments website offers details on tax assistance for individuals, corporations, tax-exempt organisations, and other groups affected by the coronavirus, such as health insurance (COVID-19).

If you itemise your deductions, donations of money or property donated to qualifying organisations are tax deductible. In general, you are permitted to deduct up to 50% of your adjusted gross income, while there are specific circumstances where 20% and 30% restrictions apply.

Timing of Contributions

Whether you utilise the accrual approach or the cash method, contributions must actually be made in cash or another kind of property before the end of your tax year to be deductible.

Deductible Amounts

In general, the fair market value of the item may be written off if it is donated to a qualifying charity in lieu of cash. However, modifications can be required if the value of the property has increased.

The wait is over for section 80g.