TAX TIPS FOR END OF YEAR GIVING – 2021 EDITION
As 2021 draws to a close, we want to pass along information about a few unique tax provisions that may allow you to obtain additional savings from your charitable giving this year.
These provisions are temporary adjustments that remain in effect through December 31, 2021, and should not be considered valid after that date.
Deductions for Non-Itemizing Individual Taxpayers
While individuals who take the standard deduction cannot normally deduct their charitable contributions, individual taxpayers can temporarily claim a limited deduction for some of their charitable donations, in addition to claiming the standard deduction. Taxpayers filing individually may claim a deduction of up to $300 for charitable contributions made to charities in 2021. Taxpayers who are married and filing a joint return may claim a deduction of up to $600 for charitable contributions made to charities in 2021.
Please note that most charitable donations qualify for purposes of this limited deduction, however, donations made to donor advised funds, private foundations, charitable remainder trusts, and Section 509(a)(3) supporting organizations generally do not qualify for purposes of the deduction.
Deductions for Itemizing Individual Taxpayers
For individual taxpayers that do itemize, adjustments have been made to expand the maximum allowable deduction for charitable contributions for 2021. For an itemizing taxpayer with sufficient qualifying 2021 charitable contributions, the individual may now elect to deduct up to 100% of their adjusted gross income.
This expanded deduction limit is not automatically applied, and must be elected on the individual’s 2021 tax return. The expanded deduction is also subject to limitations incurred based on other deductions.
Deductions for Businesses
For businesses of all types, various charitable cash and food donation deduction limits have expanded temporarily for 2021. Depending on your business’s form of organization, you may be able to deduct up to 25% of your organization’s taxable or net income based on qualifying food and cash donations made in 2021 to eligible charities.
Disclaimer
This post is intended to be informative and nothing in this post shall be construed as formal tax advice. The information contained here may not pertain to your individual facts and circumstances, and nothing written here shall be construed to create any formal or binding professional relationship between Dime Accounting, LLC, and the recipients of this marketing communication. Please reach out to your tax professional or Dime representative before implementing any information provided here in your personal tax plan. The information contained in this post cannot be used to avoid tax penalties imposed under the Internal Revenue Code.