American taxpayers who take the standard deduction can deduct a modest amount for charitable contributions on their 2021 tax returns.
The ability for many taxpayers to take deductions disappeared with the Tax Cuts and Jobs Act (TCJA) of 2018. The TCJA roughly doubled the standard deduction and most people could no longer deduct charitable contributions and other formerly deductible expenditures.
Your Charitable Donations are Tax Deductible
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress in March 2020 temporarily changed this for tax years 2020 and 2021.
Taxpayers who use the standard deduction can deduct up to $300 for cash donations made in tax year 2021. Joint filers can deduct up to $600.
- Only non-profit 501(c)(3) public charities qualify.
- Donations must be cash. Donations of clothing or household goods are not included.
- Documentation is required. For contributions of $250 or more this must be a receipt from the charity. For donations less than $250, an image of a cancelled check, a bank or credit card statement, or other documentation is acceptable.
- Gifts made to individuals directly and through websites such as GoFundMe do not qualify. Unless GoFundMe confirms the organization is a tax-exempt non-profit, your contribution is a gift and is not tax-deductible.
Charitable Donation Tips
To make a bigger impact with your donations, limit the number of organizations to which you give. Choose three or four charities that address issues that are meaningful to you and focus on them.
If you need guidance to locate a charity or to verify its tax-exempt status, websites such as Charity Navigator and Guide Star can help you identify qualifying organizations.
Taxpayers who itemize deductions on their tax returns can give up to 100% of their adjusted gross income (AGI).
- This is up from the normal limit of 60% of adjusted gross income.
- This deduction applies only to 501(C)(3) public charities and does not include private foundations and donor advised funds.
Regardless of whether you itemize deductions on your tax return, all donations must be made before the end of 2021.
As we enter the season of giving, your charitable donations will help both the causes you care about and your tax bill.
This blog is published to provide you with general information only and is not intended to provide specific or comprehensive advice. Money Care, LLC encourages individuals to seek advice from competent professionals when appropriate.
