With 2022 just around the corner, you have limited time to take advantage of expanded tax benefits for charitable donations in 2021. The CARES (Coronavirus Aid, Relief, and Economic Security) Act, which is set to expire at the end of 2021, helps individuals who make charitable donations.
Ordinarily, individuals who elect to take the standard deduction cannot claim a deduction for their charitable contributions. This year (2021), these individuals may claim a charitable deduction on their federal income tax returns for cash contributions up to $300 ($600 for joint filers). For example, if your tax rate were 22%, a $300 donation reduces your tax liability by $66. Stated differently, a $300 donation only costs you $234 after tax.
Individuals who itemize deductions can ordinarily deduct up to 60% of their adjusted gross income (AGI) for charitable cash gifts. For 2021 only, the percentage increases to 100%. For example, if your AGI were $300, a $300 donation reduces your taxable income to $0.
CLICK HERE for more details from the IRS about the expanded tax benefits for 2021.