The IRS, the Independent Sector, and the National Council of Nonprofits are this week reminding non-itemizers that charitable contributions made this year may qualify for a tax deduction. This temporary rule comes from a provision in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was designed to help cash-strapped nonprofits during the pandemic.
Since an estimated 90 percent of taxpayers take the standard deduction, many could benefit taxpayers and charities stand to benefit. However, the December 31, 2021 deadline for making a cash contribution to a qualifying charity is fast approaching. So, let’s take a look at what the IRS had to say about deducting tax year 2021 charitable contributions.
How much in charitable donations can taxpayers deduct if they take the standard deduction?
The amount of tax year 2021 cash contributions to qualifying charities that taxpayers taking the standard deduction can claim depends on their filing status:
- $300 for individuals
- $600 for married couples filing jointly
While described as “cash,” the IRS points out that qualifying contributions can actually “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 service to a qualifying charitable organization.” However, agency’s definition doesn’t cover “the value of volunteer services, securities, household items, or other property.”
Keeping that in mind, the agency notes that this temporary deduction has “special recordkeeping rules,” including:
- Obtaining an acknowledgement letter from the charity before filing a return
- Retaining a cancelled check or credit card receipt for contributions of cash
To help taxpayers meet the recordkeeping requirements, the IRS included a link to Publication 526, Charitable Contributions.
How can I find a qualifying charity?
The IRS notes that their Tax Exempt Organization Search tool can help taxpayers find charities that qualify for a tax-deductible donations. The online resource lists numerous databases that users can search, including:
- Form 990 Series Returns
- Form 990-N (e-Postcard)
- Pub. 78 Data
- Automatic Revocation of Exemption List
- Determination Letters
The page also includes several accordion menus that can contain useful information.