Photo: Dean Drobot (Shutterstock)
If you are like that 87% of taxpayers that take the standard deduction into account, you probably don’t think much about deducting donations to charity. However, a provision in last year’s COVID relief package allows you to do just that without having to break down your taxes – up to $ 600 for joint claimants. The only catch is that you have to make your donations by the end of 2021. Here’s how it works.
How the charity withdrawal rules differ for 2021
Usually you have to show your taxes to claim a charitable donation tax deduction (which in turn reduces your taxable income). But most filers don’t list details – instead they take the standard flat rate deduction of $ 12,550, which is usually more than the amount of. amounts to possible deductions that could be achieved by breaking it down. Because of this, most people don’t think about their charitable giving at tax time, which could explain why household donations to charity dropped to its lowest level in decades.
However, the CARES Act allows you to list charitable deductions in 2021 – up to $ 300 for individuals and $ 600 for married couples, provided those donations are made before the end of 2021.
So if you’ve already donated, remember to claim the deduction at tax time (keep your receipts too). And if you plan to donate, be aware that eligible donations must be in cash (i.e. currency, credit or debit cards, checks, or electronic transfers) as you cannot claim items like clothing or groceries, or claim time or services like volunteering. Also, make sure to use this before donating IRS search tool to see if the charity is eligible to receive tax-deductible charitable contributions.
G / O Media can receive a commission
There is an odd kink in charity donations in 2021, however
CNBC’s Kate Dore points out, The print is not an “above the line” print, nor is it actually an “below the line” that requires separate prints. Instead, it is an unusual third category “in between”. This means that a charity deduction will still reduce your tax burden, but it will not affect how the IRS will affect yours. calculated Annual gross income (AGI), which the federal government uses to determine your eligibility for many authorization programs.
It’s a subtle difference, but it’s worth noting if you’re betting on a charitable donation that reduces your AGI to qualify for the child tax break or reduce student loan payments. In any case, soliciting your 2021 donations to charity is still a good idea.