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Year-end 2021 tax deduction can help you donate up to $600 to charity, even if you don’t itemize

Posted on December 21, 2021

As 2021 comes to a close, our CPAs want to remind you that a new 2021 IRS CARES Act tax provision may allow you to deduct up to $600 in donations (to qualifying charities) on your 2021 federal income tax return – even if you don’t itemize.

What it does:

Generally, taxpayers who choose to take the standard deduction cannot claim a deduction for their charitable contributions.

However – this temporary IRS rule change permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations.

This affects 9 out of 10 taxpayers (very likely you) who take the standard deduction – and might potentially qualify. (Of course, the new rule will also help a lot of charities.)

How it works:

Under this new provision, individual tax filers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions made to qualifying charities during 2021. The maximum deduction is increased to $600 for married individuals filing joint returns.

Included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, a more limited version of this temporary tax benefit originally only applied to tax-year 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted last December, extended the program through the end of 2021.

The fine print:

Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with their volunteer services to a qualifying charitable organization.

Cash contributions do not include the value of volunteer services, securities, household items or other property.

Teipen CPA Group reminds taxpayers to make sure they’re donating to a recognized charity to receive a deduction. Cash contributions to most charitable organizations qualify. To be sure, check the status of your intended charity on IRS.gov, linking to Tax Exempt Organization Search.

Lastly, be sure to keep good records.
Usually, this includes obtaining an acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt for contributions of cash.

For more details on the recordkeeping rules for substantiating gifts to charity, see Publication 526 Charitable Contributions, available on IRS.gov. Or talk to your Teipen CPA.