Updated: 2 days ago
In 2019, the majority of people (87%) took the standard deduction on their income tax filing. Just 13% of people itemized their deductions. That 13% percent was a significant decrease from 33% in 2018 due to the tax reform legislation that increased the standard deduction from $6,500 for individuals to $12,400 and from $13,000 for couples to $24,800. While this is good for people and makes completing your taxes easier, it has had a very big negative impact on nonprofit charities. This tax change resulted in a reduction of $2.92 billion dollars of contributions to charities. The Cares Act of 2020 attempts to help nonprofits regain some of that lost income.
Did you know that the Cares Act provides that you can take a $300 charitable deduction in 2021 even if you do NOT itemize your deductions? So, what this means is, if you make a donation of $300 to a qualified charity and you take the standard deduction of $24,800 for joint filing, you can deduct $25,100 on your tax return without having to itemize your deductions. For the 2021 tax year, the charitable deduction is even better, at least for those who file a joint return. For 2020, the charitable limit was $300 per “tax unit” – meaning that those who are married and filing jointly can only get a $300 deduction. For the 2021 tax year, however, those who are married and filing jointly can each take a $300 deduction, for a total of $600. The $300 charitable deduction remains the same for single filing in 2021.
In addition, for those who itemize their deductions, to encourage donations to charities, the CARES Act of 2020 increases the previous maximum 60% of adjusted gross income (AGI) charitable contribution limit to 100% of adjusted gross income (AGI) limit for 2020. Therefore, for this 2020 tax year, Individuals may deduct qualified contributions of up to 100 percent of their adjusted gross income on their tax report. Contributions that exceed that amount can carry over to the next tax year.
Here is the link to this information on the IRS website: https://www.irs.gov/newsroom/how-the-cares-act-changes-deducting-charitable-contributions
Here is more information on 2021 deductions on the AARP website: https://www.aarp.org/money/taxes/info-2020/how-to-deduct-2020-charity-donations.html
DONATE ANY TIME BETWEEN NOW AND DECEMBER 31, 2021 TO TAKE ADVANTAGE OF THE $300 CHARITABLE DEDUCTION WITHOUT ITEMIZING YOUR DEDUCTIONS!
If you are looking for a qualified charity, please consider Perpetual Care, a 501(c)(3) nonprofit organization. https://www.perpetualcare.org/donate-now