Deduction for Giving (Article)

Deduction for Giving

Did the Tax Cuts and Jobs Act (TCJA) feel like the “Grinch That Stole Christmas?”  While it was certainly beneficial to have the standard deduction nearly doubled, one unintended consequence of more filers taking the standard deduction is the loss of the charitable giving deduction.  While this may reduce the motivation for some givers, many still feel the holiday spirit and wish to give.  Good for you!

Did you know that you still can receive a deduction for giving up to $300 per single filer, $600 for those married, filing jointly?  The following explanation comes from the online newsroom:

Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. The law now permits these individuals to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to certain qualifying charitable organizations. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify to claim a limited deduction for cash contributions.

Notice the deduction is limited in both amount ($300 per single filer, $600 for those married filing jointly) and time (2021 tax return.)  This will only extend through the end of 2021.

There are some restrictions.

First, the deduction is for cash donations, so the sofa you gave to Goodwill does not count.

Also there are some restrictions to the type of charity; cash contributions made to a supporting organization or to establish or maintain a donor advised fund don’t qualify.  A supporting organization is a charity that is setup to support other charitable organizations.  A donor advised fund is a charity that allows a donor to make a completed gift, while still retaining the ability to advise how the funds distributes the money.

Finally, you can’t deduct carryover contributions from 2020.

If you are not sure if your cash donation will be deductible, talk to your tax advisor.

Happy Holidays everyone, and make sure you take full advantage of all the holiday giving you are already planning to do!


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