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How Did the CARES Act Affect 2020 Taxes?

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In the second of his three-part series on ways in which the 2020 tax form is different from 2019's, Julian Block discusses the CARES Act and its impact on taxpayers. Among other topics, he covers the IRS's rules for retirees and explains how seniors can save some money with qualified charitable distributions.

Mar 18th 2021
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I devoted a previous column to two changes on IRS Form 1040. The first one: changes to educator expenses (line 10 of Schedule 1, Additional Income and Adjustments to Income). The other one: expenses incurred by volunteer workers (line 11 of Schedule A, Itemized Deductions).

Modest incentives for modest contributions. I’ll start this column with the highlights of a change that suspends some of the rules for charitable contributions.

The $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act was approved by Congress and signed by then-president Trump in response to the corona crisis. The CARES Act, enacted in March 2020, includes a provision that helps filers who decide to skip Form 1040’s Schedule A (Itemized deductions) and avail themselves of the standard deduction amounts (Line 12 on page one of the 1040 form.)

It allows nonitemizers to take 2020 deductions of as much as $300 ($150 for married couples filing separate returns) for donations to charities that qualify under Internal Revenue Code Section 501© (3). This wide-ranging category includes philanthropic groups like religious institutions, hospitals, schools, museums, and YMCAs.

Nonitemizers claim the new deduction on Form 1040’s line 10b on page one. What percent of filers are nonitemizers who no longer submit Schedule A with their 1040s? About 90 percent, says the IRS.

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