Special Charitable Deduction Extended For 2021: Deduct Up To $600 Without Itemizing

Written by Scott Glasgow, CPA

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 (which for 2021 is $12,550 for a single person, or $25,100 for married persons filing jointly). 

In 2020 the CARES Act introduced for the 2020 tax year 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.  This deduction was specifically targeted towards those who took the standard deduction, and thus were not otherwise able to take a charitable contribution deduction.  Almost 90% of taxpayers now take the standard deduction and potentially qualify for this benefit. 

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, including married individuals filing separate, for married individuals filing jointly the maximum deduction amount is now increased to $600 in 2021.  Cash contributions include those made by check, credit card, or debit card.  However, non-cash items such as the value of volunteer services, securities, household items or other property do not qualify for the deduction. 

When making charitable donations, remember to confirm whether you are giving to a qualified charity.  For those not sure about the status of the charity they give to, the IRS provides an online tool known as the Tax Exempt Organization Search tool to check an organization’s eligibility to receive tax-deductible charitable contributions.  Their website is found at:  https://www.irs.gov/charities-non-profits/tax-exempt-organization-search.

Donations to private foundations and donor advised funds do not qualify for this arrangement.

The normal IRS special recordkeeping rules for charitable contributions should always be followed.  These include obtaining an acknowledgement letter from the charity and retaining a receipt for cash contributions.  Also, contributions carried forward from prior years do not qualify for this particular deduction.

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