WASHINGTON – The Internal
Revenue Service today reminded taxpayers that a special tax provision will
allow more Americans to easily deduct up to $600 in donations to qualifying
charities on their 2021 federal income tax return.
Ordinarily, people who choose
to take the standard deduction cannot claim a deduction for their charitable
contributions. But a temporary law change now permits them to claim a limited
deduction on their 2021 federal income tax returns for cash contributions
made to qualifying charitable organizations. Nearly nine in 10 taxpayers now
take the standard deduction and could potentially qualify.
Under this provision, individual
tax filers, including married individuals filing separate returns, can claim
a deduction of up to $300 for cash contributions made to qualifying charities
during 2021. The maximum deduction is increased to $600 for married
individuals filing joint returns.
Included in the Coronavirus
Aid, Relief, and Economic Security (CARES) Act, enacted in March 2020, a more
limited version of this temporary tax benefit originally only applied to
tax-year 2020. The Taxpayer Certainty and Disaster Tax Relief Act of 2020,
enacted last December, generally extended it through the end of 2021.
Cash contributions include
those made by check, credit card or debit card as well as amounts incurred by
an individual for unreimbursed out-of-pocket expenses in connection with
their volunteer services to a qualifying charitable organization. Cash
contributions don’t include the value of volunteer services, securities,
household items or other property.
The IRS reminds taxpayers to
make sure they’re donating to a recognized charity. To receive a deduction,
taxpayers must donate to a qualified charity. To check the status of a
charity, they can use the IRS Tax Exempt Organization Search tool.
Cash contributions to most
charitable organizations qualify. But contributions made either to supporting
organizations or to establish or maintain a donor advised fund do not.
Contributions carried forward from prior years do not qualify, nor do contributions
to most private foundations and most cash contributions to charitable
remainder trusts.
In general, a donor-advised
fund is a fund or account maintained by a charity in which a donor can,
because of being a donor, advise the fund on how to distribute or invest
amounts contributed by the donor and held in the fund. A supporting
organization is a charity that carries out its exempt purposes by supporting
other exempt organizations, usually other public charities.
Keep good records
Special recordkeeping rules apply to any taxpayer claiming a charitable
contribution deduction. Usually, this includes obtaining an acknowledgment
letter from the charity before filing a return and retaining a cancelled
check or credit card receipt for contributions of cash.
For details on the
recordkeeping rules for substantiating gifts to charity, see Publication 526, Charitable Contributions, available on
IRS.gov.
Remind families about
the Child Tax Credit
Besides the special charitable contribution deduction, the IRS also
encourages employers to help get the word out about the advanced payments of the Child Tax Credit because they
have direct access to many employees and individuals who receive this credit.
In particular, remind low-income workers, especially those who don’t normally
file returns, that the deadline for signing up for these payments is now Nov.
15, 2021. More information on the Advanced Child Tax Credit is available on IRS.gov.
For more information about
other Coronavirus-related tax relief, visit IRS.gov/Coronavirus.
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