End of Year Giving

You Could Be Eligible for Up to $600 in Special Tax Deductions if You Donate to Meals on Wheels This Year

A special tax deduction will reward taxpayers who make charitable donations this year.

Taxpayers who take the standard deduction can claim a deduction of up to $300 for cash contributions to qualifying charities made in 2021. Married couples filing jointly can claim up to $600. Whether you’re gifting a donation on a loved one’s behalf or you want to give back to a cause you support, you may be eligible for the special deduction on your cash donations this upcoming tax season.

Here’s what you need to know to determine if your donations are eligible and how to qualify for the special deduction this tax season:

What is the Special Tax Deduction?

Last year, the CARES Act legislation passed in response to the pandemic included a special tax deduction that allowed single and married tax filers to claim up to $300 in cash charity donations.

When the Taxpayer Certainty and Disaster Tax Relief Act of 2020 was passed last December, it extended this special deduction through 2021. This year, individuals can still claim up to $300 in deductions for eligible cash donations, and married couples can get up to an increased $600 when filing jointly.

In previous years, deductions for charitable contributions were only available for people who itemize their tax returns. But the special deduction is available for anyone who takes the standard deduction, which the IRS says is nine out of 10 taxpayers.

But that doesn’t mean you’ll get the full $300 (if you’re single or married filing individual returns) or $600 (if you’re married and filing jointly) back. Instead, the charitable tax deduction will help reduce your overall taxable income and, therefore, the taxes you’re obligated to pay.

Even if you donate only $50 or $100 this year — or any other amount — you can still claim deductions less than the maximum $300 or $600 to help reduce the amount that you may owe.

What Donations Are Eligible?

Any cash contributions you make to qualifying charitable organizations in 2021 count toward the special deduction.

This includes donations made by check, credit card, or debit card. And while the value of volunteer services are not eligible, contributions can include unreimbursed out-of-pocket expenses from volunteering with a charity.

Who Benefits from the Special Deduction?

While a small number of taxpayers who itemize their returns have long been able to claim charitable contributions, this special deduction benefits those who take the standard deduction — the vast majority of taxpayers. For tax year 2021, the standard deduction is $12,550 for those single and married filing individually, and $25,100 for married couples filing jointly.

Keep Records of Your Giving

If you plan to take advantage of the special tax deduction this year, make sure you keep a record of any eligible donations you make.

A few accepted ways to show proof include a letter from the charity, a canceled check, or a credit card receipt. The donation record must show the name of the organization, the amount, and the date that the donation was made. The IRS also has a full list of qualifying records for your tax return.

Bottom Line

It’s the season for giving, and the special tax deduction for charitable giving can offer extra incentive to donate this month.