HomeNewsTax Season: How to Claim Tax Write-Off for Charity Donations Even If You Don’t Itemize Deductions

Tax Season: How to Claim Tax Write-Off for Charity Donations Even If You Don’t Itemize Deductions

by Victoria Santiago
(Photo by Joe Raedle/Getty Images)

It’s tax season, folks. And if you were one of the millions of Americans that gave to charity in 2021, you should be claiming a tax write-off on this year’s return.

This year, there’s a deduction for cash gifts up to $300 for single filers. For couples filing jointly, you may be able to get up to $600, according to the IRS.

Thankfully, amid tax season woes, it’s easier than ever for filers to qualify for the 2021 charitable tax break.

Tax Write-Off Incentive

This is thanks to the CARES Act of 2020. Congress provided a boost to charities by offering an incentive for Americans that make cash gifts. Lawmakers then decided to extend the tax write-off for 2021.

This tax write-off isn’t “above-the-line,” so it won’t affect your adjusted gross income. However, it’s not an itemized deduction, either.

This tax benefit is only temporary, so if you gave to charities last year, make sure you claim it. Part of the reason why people don’t is that it’s easier to just do a standard deduction. In fact, almost 90% of filers use the standard deduction. Thus, it’s harder for average people to claim tax breaks for smaller gifts.

However, this temporary law allows those taking a standard deduction to qualify. For single filers, this standard deduction is $12,550. For married taxpayers, it’s $25,100.

This means that anyone can now deduct a cash contribution to a charity on their taxes. You can do this even if you’re unable to itemize your deductions.

There are still some rules, though. Your cash gift (which includes payments by check, credit card, or debit card) must have gone to a qualified charity. If you transferred money to a donor-advised fund or a private foundation, it won’t count.

Those Who Itemize Deductions Could See Bigger Returns in 2022

The tax breaks up to $300 and $600 are definitely a perk for many Americans. However, those who itemize deductions might get a bigger tax write-off by gifting other types of assets.

We’ve been talking about it a lot lately, but it’s worth mentioning: stocks or other investments could put more money in your pocket. For example, if you held stocks or investments for more than one year in your taxable portfolio, you can consider transferring those to charity.

By doing so, the donation may avoid capital gains taxes, which depend on income. For 2022, CNBC reports that those tax rates are 0%, 15%, and 20%. However, you have to give the assets directly to the organization. It won’t work if you sell and then donate the proceeds.

If you’re looking to make the most of your tax write-off, this could be the way to go. Of course, there are other factors to think about before doing this. As always, it’s best to talk to a tax expert to make sure you’re making the right decision for yourself.