Good news if you made a charitable donation in 2020…
If you made charitable contributions in 2020, did you know that you can deduct cash gifts from your taxable income without having to itemize?
Why? Because the pandemic relief CARES Act of 2020 included temporary changes to tax law, allowing you to take up to a $300 deduction for charitable donations regardless of whether you itemize!
There’s more good news in 2021…
Congress approved another above-the-line tax deduction for gifts of cash to charities of up to $300 for individuals and up to $600 for joint filers. It’s basically an extension and enhancement of the one-year tax break Congress approved in the 2020 CARES Act.
Why is the new “above-the-line” deduction important? The above-the-line deduction lets non-itemizers take a charitable deduction too. For a married couple filing jointly who take the standard deduction in tax year 2021, if they give $600 to charity, they’d get the $600 tax break in addition to the standard deduction ($12,550 for individuals and $25,100 for joint filers). If they’re in the 10% tax bracket, it would save them $60 in federal taxes. If they’re in the 37% tax bracket, it would be worth $222.
NOTE: An “above-the-line” deduction will also reduce your adjusted gross income.
For more information visit https://www.irs.gov/newsroom/how-the-cares-act-changes-deducting-charitable-contributions