- Married couples filing jointly for 2021 can deduct as much as $600 of charitable donations if they don’t itemize, while the limit is $300 for singles. For 2020, the maximum deduction was $300 per return for joint filers and singles.
- On federal income-tax returns for 2020, this deduction was an “above-the-line” deduction, meaning it was entered above the line for adjusted gross income, or AGI. That reduced AGI, a number that can affect many other tax items. Congress wrote the law slightly differently for 2021, making it below the line—not reducing AGI, but still reducing taxable income. A draft of IRS Form 1040 for 2021 shows it on line 12-b.
A few reminders on points that haven’t changed:
- This provision applies to “cash” donations, such as cash, check and credit cards. Make sure you have the required documentation.
- Contributions of “noncash” items, such as clothing or securities, don’t count.
- Gifts must go to “qualified” charities; donor-advised funds aren’t considered qualified for this provision.
Meanwhile, a popular provision known as a qualified charitable distribution, or QCD, remains alive and well. With a QCD, investors 70½ or older typically can transfer as much $100,000 a year directly from an IRA to charity without owing taxes on that transfer. This move, which must be done directly from the IRA to a qualified charity, counts toward the taxpayer’s required minimum distribution for that year. Donations to donor-advised funds don’t count. Transfers of more than the exclusion amount are included in income, the IRS says. See IRS Publication 590-B for more details.