Taxpayers saw an extended tax benefit in 2020 for their charitable contributions. The Taxpayer Certainty and Disaster Tax Relief Act expanded this benefit into 2021. So what does this mean for individuals and businesses?

Individual Tax Benefits:

Taxpayers who elect the standard deduction can deduct up to $300 of cash contributions made to qualifying charitable organizations. The deduction is up to $600 for married individuals filing a joint return. For the purposes of the deduction, contributions can be made by cash, check, credit card, and also include expenses related to an individual’s volunteer services to a qualifying charitable organization.

Taxpayers who itemize can usually deduct cash contributions made to qualifying charitable organizations. The added benefit to itemizing taxpayers in 2021 is an increased limit on contributions. They are able to deduct up to 100% of their AGI for cash contributions made to a qualifying charitable organization. Taxpayers will have to make an election for the increased limit.

Corporate Tax Benefits:

The tax law increased the limit for C Corporations to 25% of taxable income. Corporations will have to make an election for the increased limit to apply.

All taxpayers should keep records of any charitable donations for the year. For any questions regarding how to do so or to see if your donations qualify, please consult your tax preparer.