The whole point of Giving Tuesday is to take a break from the holiday shopping frenzy by donating to your favorite charities, but there’s no reason it shouldn’t bring a little added benefit as well. This can come in the form of a write-off that will lower your 2021 federal tax bill. This year, you can take the deduction even if you don’t itemize.
For that, you can thank the Taxpayer Certainty and Disaster Tax Relief Act of 2020, which was enacted last December. As the IRS notes on its website, the law provides several provisions to help taxpayers who give to charity, including on Giving Tuesday.
One of the provisions is to let individuals claim charitable deductions on their 2021 federal income tax returns without itemizing — but only up to a certain point. Typically, taxpayers who elect to take the standard deduction instead of itemizing can’t claim a deduction for their charitable contributions.
Under the new law, the limit for writing off contributions without having to itemize is $300 for cash contributions made to qualifying charities if you file as single or married filing separately. The maximum deduction is $600 for married individuals filing joint returns.
“This is a unique opportunity to take advantage of a temporary tax benefit,” Juan Ros, certified financial planner at Forum Financial Management in Thousand Oaks, California, told CNBC.
The temporary benefit lets taxpayers write their charitable donations off and still take the standard 2021 deduction of $12,550 for single filers or $25,100 for married taxpayers. The donation must come in the form of a cash gift — including payments by check, credit card or debit card — and go to a qualified charity. You can’t claim the deduction for transfers to a donor-advised fund or private foundation
For a list of qualified charities, visit the IRS website. Also, make sure you keep good records. The IRS recommends obtaining an acknowledgment letter from the charity and retaining a cancelled check or credit card receipt for cash contributions before you file your return.
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