How about another tax tip? Today, we center the discussion about charitable donations.

It’s become a real issue. After all the TCJA (Tax Cut and Jobs Act) finagled with our ability to itemize deductions. By agglomerating the personal exemptions and the standard deduction into one number. Changing the itemized deduction threshold to $12500 ($18500 for Head of Household and $ 25100 for Marrieds) means it’s a lot harder to itemize. Especially, since we’ve been limited to $ 10K for SALT (state and local taxes). These changes meant a reduction in those filing Schedule A (Itemized Deductions) to about 10% of all taxpayers.

So, during the pandemic, the government changed the rules (Taxpayer Certainty and Disaster Tax Relief Act of 2020) for charity somewhat. And, the CARES (Coronavirus Aid, Relief, and Economic Security) Act extended those benefits through calendar year 2021.

For those of us who can’t (or don’t) itemize, we are still able to deduct charitable donations. (These deductions do not include any moneys provided to donor advised funds, nor to the value of volunteer services, household items (or other property), or even securities.) OK, not really. Because we only get to deduct $ 300 ($600 for Marrieds filing jointly). Obviously, if you’re like me that’s cold comfort. Since my charitable donations exceed that value by a very, very large multiple. (I have found other ways to deal with this severe limitation.)

And, just because this is a small deduction, don’t expect the rules on proof to be relaxed. For all charitable deductions, one must have an acknowledgement letter from the charity AND a canceled check or credit card receipt. (You did notice that cash donations- unless there is a letter from the charity- do NOT work as deductions.)

For those of us who DO itemize, the limits on charitable donations (ranging from 20% to 60% of our AGI [adjusted gross income]) have been almost obliterated. As long as the value of charitable donations does not exceed 100% of our AGI. (Again, this is only for CY 2021. Next year- back to the old rules.) And, just like for the non-itemizers, the same rules apply- no donor advised funds, charitable remainder trusts, etc. (This includes the requirement for the requisite letter and canceled  check/credit  card  receipts.)And, then, there’s the corporation rule. Instead of limiting charitable donations to 10% of taxable income, the limit this year is 25%.

For those firms donating food inventory (for care of the ill, needy, or infants), there also are increased limits- from 15% to 25% of taxable income. Moreover, if the firm is an S entity, a partnership, or even a sole proprietorship, the 25% applies to the aggregate net income for all trades and businesses from which those contributions derive.

Please donate- many folks and causes need out help.  Even if you can’t deduct the whole portion of your beneficence.

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