How to deduct charitable donations if you don’t itemize taxes
You can get tax relief for this year’s contributions to nonprofits and charities even if you don’t itemize your taxes next year.
Indeed, a year ago Congress and President Donald Trump agreed to allow taxpayers to deduct up to $ 300 for cash contributions to qualifying organizations in 2021. Married couples who jointly file can deduct 600 $.
While it’s impossible to say exactly how this will help California nonprofits, which include thousands of such organizations statewide, there is great potential, especially if the hiatus is extended. and expanded into the future, said Lucy Salcido Carter, policy director of CalNonprofits.
Nonprofits employ about 1.2 million people in the state and provide about a third of all Medi-Cal services.
“So you can see the impact California nonprofits have on our economy, our workforce and our service supply chain,” she said.
It is difficult to precisely quantify what the deduction will mean. About 90% of taxpayers do not itemize their federal return, but typically less than half of U.S. households make tax-deductible contributions.
“The potential payoff for nonprofits in our state is significant if every Californian who files a non-detailed return takes advantage of this universal charitable deduction opportunity,” Carter said. “But there are other political variables at play.”
The deduction was created for the 2020 tax year to help nonprofits during the COVID pandemic. This year, couples filing jointly can deduct up to $ 600 instead of $ 300.
The deduction has been of great help to small local nonprofits, said Rick Cohen, chief operating officer of the National Council of Nonprofits.
“These are not million dollar gifts. It’s the $ 50 here, $ 100 there. For the nonprofits who receive these little freebies, it makes a huge difference, ”he said, especially for more local agencies.
The 2017 tax law discouraged itemized deductions, as it allowed a huge increase in the standard deduction and curbed some popular break-ups. Among them is an inability to deduct state and local tax payments over $ 10,000.
This law also “made major changes that discourage charitable giving from previous tax legislation,” the non-partisan Tax Policy Center said.
Questions and answers
Some questions and answers from the Internal Revenue Service about the charitable deduction:
Q. How to deduct the amounts?
A. Line 12B of your 2021 1040 form.
Q. What is a “cash contribution?” “
A. This is any donation made by cash, check, credit card or debit card. It can also include expenses incurred by a person as a volunteer for a qualifying charity.
Q. How do I know if my donation went to an eligible organization?
A. Visit the IRS’s Search for Tax-Exempt Organizations site.
Q. What might not be eligible?
A. Contributions made “either to support organizations or to establish or maintain a donor-advised fund,” the IRS says. Neither agree: donations from previous years or those made to most private foundations or most cash contributions to charitable residual trusts.
Q. Elaborate, please.
A. Here’s how the IRS describes it: “In general, a donor advised fund is a fund or account managed by a charity in which a donor can, by virtue of their donor status, advise the fund on how to distribute or invest the sums paid by the donor and held in the fund.
Also: “A support organization is a charity that pursues its exempt purposes by supporting other exempt organizations, generally other public charities.
Q. Is there a deadline for making these contributions?
A. December 31, 2021.
This story was originally published December 28, 2021 5:25 am.