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Taking Advantage of Expanded Tax Benefits Available Through Charitable Donations

  • Deductions for charitable giving extended through the end of 2021
  • C corporations can qualify for deductions of up to 25 percent of their taxable income
  • Businesses must meet certain requirements, such as adequate recordkeeping, to qualify

Summary by Dirk Langeveld

Businesses that make charitable donations can take advantage of expanded tax breaks this year.

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extends some provisions of CARES Act through end of 2021. Under this extension, C corporations can apply for an increased corporate limit and deduct qualified contributions of up to 25 percent of their taxable income. Contributions must be made in cash to an eligible charity.

The limit has also been increased to 25 percent of taxable income for donations of food inventory to charitable organizations. For businesses other than C corporations, the deductible limit will be based on aggregate new income from all trades or businesses where the contributions are made.

Businesses must meet certain requirements to be eligible for the deductions, including adequate recordkeeping and supporting documentation like a letter from the charity.

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