Holiday Tax Relief
We are so grateful for the support from donors like you, who help us in the fight to end economic euthanasia in our community. This holiday season as you make your year-end gift, we want to make sure you know about exciting temporary tax benefits for donors set to expire on December 31. Make a contribution in 2021 and receive a great tax deduction.
Under the temporary law, you do not need to itemize deductions on their tax returns to take advantage of this benefit. For people who take the standard deduction, you can take a tax deduction for contributions to nonprofit organizations up to $300 per year. The 2021 standard deduction is $12,950 for individuals and $25,100 for married couples filing jointly.
For people who file for itemized deductions, you can take a tax deduction of up to 100% of your adjusted gross income (AGI) for donations. The new law temporarily lifts the limits on charitable giving from 60% to 100% for 2021.
Corporate donors can take a tax deduction of up to 25% of their adjusted taxable income for contributions to charities. The new law temporarily increases the limit from 10% of adjusted taxable income to 25% for 2021.
Deduction for individuals who don’t itemize
Usually taxpayers who take the standard deduction cannot deduct their charitable contributions. The law now permits taxpayers to claim a limited deduction on their 2021 federal income tax returns for cash contributions they made to certain qualifying charitable organizations. These taxpayers, including married individuals filing separate returns, can claim a deduction of up to $300 for cash contributions to qualifying charities during 2021. The maximum deduction is $600 for married individuals filing joint returns.
Cash contributions include those made by check, credit card or debit card as well as unreimbursed out-of-pocket expenses in connection with volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.
100% limit on eligible cash contributions made by taxpayers who itemize deductions in 2021
Taxpayers who itemize can generally claim a deduction for charitable contributions to qualifying organizations. The deduction is typically limited to 20% to 60% of their adjusted gross income and varies depending on the type of contribution and the type of charity.
The law now allows taxpayers to apply up to 100% of their AGI, for calendar-year 2021 qualified contributions. Qualified contributions are cash contributions to qualifying charitable organizations.
The 100% limit is not automatic; the taxpayer must choose to take the new limit for any qualified cash contribution. Otherwise, the usual limit applies. The taxpayer’s other allowed charitable contribution deductions reduce the maximum amount allowed under this election. Eligible individuals must make their elections on their 2021 Form 1040 or Form 1040-SR.
Corporate limit increased to 25% of taxable income
The law now permits C corporations to apply an increased corporate limit of 25% of taxable income for charitable cash contributions made to eligible charities during calendar year 2021. The increased limit is not automatic. C corporations must the choose the increased corporate limit on a contribution-by-contribution basis.
Increased limits on amounts deductible by businesses for certain donated food inventory
Businesses donating food inventory that are eligible for the existing enhanced deduction may qualify for increased deduction limits. For contributions made in 2021, the limit is increased to 25%. For C corporations, the 25% limit is based on their taxable income. For other businesses, including sole proprietorships, partnerships, and S corporations, the limit is based on their total net income for the year. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.