Special Charitable Deduction Extended for 2021: Deduct up to $600 Without Itemizing

By: Scott Glasgow

CPA , O'Leary-Guth Law Office, S.C. 

Before 2020 charitable donations were only deductible if you “itemized” your deductions.  Taxpayers generally “itemize” their deductions when their total deductions exceed the standard deduction ($12,550 for a single person and married filing separately, and $25,100 for married persons filing jointly).  

The CARES Act introduced an “above the line” deduction (a deduction you can take even if you don’t itemize) of up to $300 for cash contributions made to qualifying charitable organizations for the 2020 tax year.  This deduction was specifically targeted towards those who took the standard deduction, and thus were not otherwise able claim a charitable deduction for cash contributions.  (Almost 90% of taxpayers now take the standard deduction).  This deduction has now been extended through the end of 2021 by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.  

While the $300 maximum is still in place for individuals and for married individuals filing separately, the maximum deduction amount for married individuals filing jointly is now $600 in 2021.  Cash contributions include those made by check, credit card, or debit card.   However, donations to private foundations and donor advised funds do not qualify for this deduction. In addition, non-cash items (such as the value of volunteer services, securities, household items or other property) are not deductible by taxpayers who claim the standard deduction. Also, contributions carried forward from prior years do not qualify for this particular deduction.

When making charitable donations, remember to confirm whether you are giving to a qualified charity.   The IRS provides an online tool known as the Tax Exempt Organization Search for checking an organization’s eligibility to receive tax-deductible charitable contributions.   

It’s also important to keep records of all charitable contributions.  These include obtaining an acknowledgement letter from the charity and retaining a receipt for cash contributions.  More information on how to track your charitable donations can be found HERE.

Please let us know if you have any questions about the tax consequences of your 2021 charitable giving.