Your charitable donations are tax deductible…

Non-itemizer taxpayers:

Cash charitable contributions can be deducted on your 2021 tax return even if you don’t itemize. For many years, taxpayers were only allowed to deduct their cash charitable contributions if they itemized their personal expenses on Schedule A. For 2020 and 2021 tax years, the Consolidated Appropriations Act extended the charitable deduction for non-itemizer taxpayers. Married couples filing a joint return may now deduct up to $600 while married filing separately or single taxpayers can only deduct $300.

To be eligible, the donation must meet certain requirements including the following:

1. They must be made to eligible organizations.

2. They must be made in cash (includes cash, checks, credit, or debit cards, and electronic fund transfers).

3. They must be made during the calendar year 2021.

4. Taxpayer must have a bank record or written statement from the charity to deduct any donation.

Note: if you itemize your personal expenses, you can’t take advantage of the $300 deduction ($600 if MFJ). This deduction has only been extended for 2021 tax year, until further notice.

Itemizer taxpayers:

The act allows cash contributions to public charities to be deducted up to 100% of AGI (up from 60% of AGI) for taxpayers that itemize. Corporations can also deduct up to 25% of its taxable income for cash donations. If you donate property other than cash to a qualified organization, you may generally deduct the fair market value of the property. If the property has appreciated in value, however, some adjustments may have to be made. Donations other than cash, may be limited to 20%, 30%, or 50% of your AGI depending on the type of contribution and the organization.

According to Publication 561, taxpayers can deduct household good such as furniture, appliances, electronics, furnishings, and linens; but the price is less than the price paid when new. These items and donated clothing must be in good used condition or better to claim the tax deduction, and if they are not in good used condition and you take more than $500 deduction, you are required to get a qualified appraisal and submit Form 8283, Section B. Also, taxpayers can deduct out-of-pocket expenses for volunteering at a qualified organization.

Note: You should always keep track of all your charitable contributions and keep all the qualified documentation to deduct them on your tax return.

Qualified documentation includes bank statements, credit card statements, a receipts from charity, W-2s or Paystubs if deducted from payroll. Additional documentation may be required for the following contributions:

1. Cash or property donations worth more than $250: You must get a written letter of acknowledgment from the charity which includes the amount of cash donated and the estimate of goods and services donated.

2. Non-cash donations worth $500: Fill out form 8283, Section B and attach an appraisal of each item worth more than $5,000.

Qualified Charities:

According to the IRS, Taxpayers can only deduct donations given to qualified charities. Qualified charities include the following:

1. Churches, synagogues, and other religious organizations.

2. Federal, state, and local governments, assuming the contribution is made for public purposes.

3. Nonprofit schools and hospitals.

4. The Salvation Army, American Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts of America, Girl Scouts of America, Boys and Girls Clubs of America, etc.

5. War Veterans’ organizations.

6. A nonprofit cemetery company if funds are used solely for the care of the cemetery.

Note: Contributions that exceed the limit amount can be carried forward for the next five years. Also, remember that you can only itemize your charitable contributions and other qualified personal expenses if they exceed the Standard Deduction for your current filing status. Check my prior post for more details on Itemized Deductions.

If you have any questions, contact us via email at contact@ztaxllc.com or call/message at (347) 720-224.

Source (s):

-IRS.GOV. Publication 561, Determining the value of donated property.