While trying to solve one mystery in CARES Act Charity Donation Deduction: $300 or $600 for Married? I accidentally introduced another mystery. Is the deduction ongoing until the law changes again or is it a one-off for only 2020?
The text of the CARES Act said (bold added by me):
(22) CHARITABLE CONTRIBUTIONS.—In the case of taxable years beginning in 2020, the amount (not to exceed $300) of qualified charitable contributions made by an eligible individual during the taxable year.CARES Act (page 65)
Because it said “years” (plural) and it gave no end-date, I thought this was an ongoing deduction. Tax attorneys at White & Case LLP wrote in April on Bloomberg Tax (bold added by me):
For individual taxpayers who do not itemize deductions, the CARES Act creates a new and seemingly permanent above the line deduction of up to $300 (additional to the standard deduction) for cash contributions made to qualifying charities.Historic CARES Act Will Have Significant Impact on Companies, Individuals, Bloomberg Tax
However, reader MDM pointed out in a comment that the “taxable years” refer to fiscal years that can start on different dates in a year, and all those fiscal years must begin “in” 2020. MDM said if Congress wanted this to be an ongoing deduction they would’ve said “taxable years beginning after December 31, 2019.”
So what is it? An ongoing deduction or a one-off for only 2020?
The IRS Form 1040 draft instructions that solved our previous mystery doesn’t help. That document is specifically for 2020. It doesn’t say anything about 2021 and beyond. I turned to my trusted source Wolters Kluwer. Wolters Kluwer publishes guides for tax professionals. They wrote in August (bold added by me):
To encourage individuals to give more during the COVID-19 pandemic, Congress provided an incentive to non-itemizers to make charitable contributions. For 2020 only, an individual may claim an “above-the-line” deduction for up to $300 in charitable donations. The legislation is unclear, but most observers assume that the dollar limitation is $600 for married individuals filing jointly.Charitable Contributions Continue to Rise; Expansion of Above-the-Line Deduction Proposed by John Buchanan at Wolters Kluwer
While it wasn’t clear at that time whether the deduction is $300 or $600 for married filing jointly, it was clear the deduction is a one-off for only 2020.
The Joint Committee on Taxation is a nonpartisan committee of Congress staffed by experienced economists, attorneys, and accountants, who assist Congress on tax legislation. They wrote in their detailed description of the CARES Act (bold added by me):
The provision permits an eligible individual to claim an above-the-line deduction in an amount not to exceed $300 for qualified charitable contributions made during a taxable year that begins in 2020. The above-the-line deduction is not available for contributions made during a taxable year that begins after 2020.Description of the Tax Provisions of Public Law 116-136, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, The Joint Committee on Taxation
Oh well. I should learn how to read. Thank you, MDM, for pointing out the error.