11.5_blog Year-End Giving: Tax deduction for Charitable Donations
11 / 05 / 21

Year-End Giving: Tax deduction for Charitable Donations

 

The IRS is reminding Americans that a tax deduction will help Americans deduct up to $600 in donations to qualifying charities on their 2021 tax return. 

Typically, Americans who choose to take the standard deduction on their taxes cannot claim their charitable contributions, but a temporary law is allowing them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations. Almost nine in ten taxpayers can potentially qualify. 

With this special tax provision, individual tax filers, including married individuals filing separate returns, can claim up to $300 for cash contributions that they made in 2021 to qualifying charities. For married individuals filing joint returns, the maximum deduction is $600. 

A more limited version of this tax provision was applied to the 2020 tax year through the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was enacted in March of 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended this through the end of 2021. 

Cash contributions to charitable organizations includes donations made via check, credit card, debit card, and out-of-pocket expenses in connection to volunteer services for a qualifying charity. Contributions that do not apply for this tax provision are the value of volunteer services, securities, household items, or other property. 

For a donation to qualify, it must be to a recognized charity. Taxpayers can check the status of a charity by using the IRS Tax Exempt Organization Search tool. Although donations to most charities qualify, those made either to supporting organizations or to establish or maintain a donor advised fund do not. Other contributions that do not qualify are for donations from prior years, those to private foundations, or those made to charitable remainder trusts.

Special recordkeeping rules apply to taxpayers claiming a charitable contribution deduction. This can be an acknowledgement letter from the charity before filing and retaining a cancelled check or credit card receipt for contributions of cash. For more information about recordkeeping rules for charitable donations, you can view the Publication 526, Charitable Contributions.

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