Individuals may receive additional benefits for charitable gifts this year. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 included temporary tax benefits to encourage charitable gifts. These benefits include deductions for individuals who do not itemize and a 100% AGI (Adjusted Gross Income) limit for itemized charitable cash gifts by individuals.
1. Non-itemizer Taxpayers — Because new tax laws in 2017 dramatically increased the standard deduction, almost 90% of taxpayers do not itemize. At one time, taxpayers who did not itemize were not able to use the benefits of a charitable deduction. However, for 2021, it is now possible to deduct cash gifts up to $300 for an individual or $600 for a married couple filing jointly. These additional deductions are available for taxpayers who take the standard deduction. Gifts must be made by check, credit card or debit card to a qualified public charity such as the IBMA Foundation. Volunteers who have unreimbursed out-of-pocket expenses will also qualify for this deduction.
2. Cash Deductions Up to 100% AGI — In recent years, cash gifts to public charities had deduction limits of 60% of a donor’s adjusted gross income, but in 2021 the limit was temporarily raised to 100% of AGI. Donors who contribute more than the limit may carry the deduction forward for up to five years after the year of the gift.
RETURN to the November 1, 2021 issue of The Cornerstone.
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