2021 Tax Break: IRS is Allowing Write-Offs of $600 in Donations to Qualifying Charities
In a recent press release, the IRS reminds taxpayers that a special tax provision will allow more Americans to “easily deduct $600 in donations to qualifying charities on their 2021 federal income tax return.”
See: 6 Ways You Might Be Eligible for a Tax Write-Off
Find: Should You Refinance Now With the Low Mortgage Rates?
Under normal circumstances, people who take the standard deduction cannot claim a deduction for their charitable contributions. However, a temporary law permits them to claim a limited deduction — specifically, for cash contributions made to qualifying charitable organizations — on their 2021 federal income tax return. Almost 90% of taxpayers now take the standard deduction and could potentially qualify, the agency said.
Under this new law, individual tax filers and 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 amount is now increased to $600 for married individuals filing joint returns.
Part of the CARES coronavirus relief act, a more limited version of this temporary tax benefit originally was only applied to the tax-year 2020. The benefit was extended through the end of 2021 by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
See: What Is the Standard Tax Deduction?
Find: Tax Credits vs. Tax Deductions — Here’s the Difference
The types of contributions that qualify are cash, 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. These expenses all qualify as “cash” contributions.
What does not qualify as a cash contribution are the values of volunteer services, securities and household items and other property.
To be eligible for these deductions, it is important to make sure you’re donating to a recognized charity. The IRS has a Tax Exempt Organization Search tool you can use to check an organization’s eligiblity.
More From GOBankingRates
- Find Out Who Made GOBankingRates’ Best Credit Cards Lists and Get Helpful Tips
- Social Security Benefits Might Get Cut Early — What Does It Mean for You?
- How To Use a Credit Card Like a Pro This Holiday Season
- 15 Mortgage Questions To Ask Your Lender
About the Author
Check Out Our Free Newsletters!
Every day, get fresh ideas on how to save and make money and achieve your financial goals.
