The Maximum Universal Charitable Donation Tax Deduction (EXPIRED)

The 2021 Universal Charitable Donation Tax Deduction was $600 for Married Filing Jointly & $300 for Other Filers. It Has Expired for 2022, 2023, and Beyond.

Update: The below information is for the 2021 tax year (2022 tax filing). It’s now too late to make a charitable donation deduction for the 2021 tax year and the universal tax donation deduction expired at the end of 2021.

The new universal charitable tax deduction for cash donations that was authorized for all tax filers (not just itemizers) last year was renewed for 2021 and increased for “married filing jointly” filers to $600 and from $150 to $300 for “married filing separately” filers. In order to claim the deduction, you must get your cash donations in by the end of the year.

There was confusion last year as to whether this new charitable tax deduction, which was originally created within the CARES Act as a COVID relief measure, was $300 per person or $300 per tax return (the correct answer was “per return”). In order to remove any doubt for the 2021 tax year, Congress not only extended the charitable donation tax deduction as part of the 2nd COVID relief bill (The Taxpayer Certainty and Disaster Tax Relief Act of 2020), passed last December, but also specifically wrote into law that the maximum charitable contribution for “married filing jointly” tax returns would be increased to $600 in 2021 and $300 for “married filing separately” returns.

To recap, the maximum charitable donation deduction amounts in 2021 for non-itemizers is:

  • Single, Head of Household, Qualifying Widow(er): $300 (same as last year)
  • Married Filing Separately: $300 (up from $150 last year)
  • Married Filing Jointly: $600 (up from $300 last year)

Cash contributions carried forward from prior years do not qualify.

charitable donation tax deduction

Weren’t Charitable Donations Always Tax Deductible?

This is a common question I’ve seen since the new charitable donation was announced. The short answer is “yes”. The long answer is “Yes, but you have to itemize your deductions on your return”. With the tax reform that was enacted in 2017, the number of filers who itemize their taxes has dropped from about 40% to 11.4%, with everyone else claiming the new higher standard deduction.

In my past life, I was a fundraiser for a non-profit organization and saw the importance of the donation tax deduction incentive (everyone wanted a receipt). This led to me accurately predicting that the 2017 tax reform bill would cause a cash crunch for 501(c)(3) charitable organizations. In 2018, the first year after tax-reform was enacted, 14.8 million returns claimed a charitable deduction. That was down from 37.9 million the year prior – a 61% decline.

Congress correctly recognized that COVID could result in an even bigger hit to charitable organizations, so they decided to create the new charitable tax deduction to help them survive, in addition to giving taxpayers an added financial boost. Let’s hope they renew the new deduction moving forward.

The New Charitable Deduction is Universal and in Addition to the Standard Deduction

The $300 (individual) and $600 (married filing jointly) cash donation deduction are universally available to all taxpayers who make qualifying donations. Last year, the donation was considered to be an “above line” deduction for taxpayers, meaning that it reduced annual gross income (AGI) and taxable income by that amount, prior to the standard deduction being applied for those who claim it.

In 2021, the donation is no longer considered “above the line”, meaning that it will not impact AGI. However, it also is not considered “below the line” and can still be claimed in addition to the standard deduction, instead of only being eligible to be claimed as a deduction if you itemize.

Does the Donation Deduction Have to be a Cash Donation?

The donation tax deduction has to be cash or cash equivalent (e.g. a check, electronic funds transfer, debit card, or credit card donation, or unreimbursed out-of-pocket expenses). Donation of items, time, and stocks or other assets are not eligible for the deduction.

What Organizations Qualify for the Donation Deduction?

To see if donations to a specific organization are eligible for a tax deduction, use the IRS’s Tax Exempt Organization Search tool to determine the organizations tax exempt 501(c)(3) status.

Are there Any Other Tax Changes for Charitable Donations?

Yes, those who itemize taxes can deduct up to 100% of adjusted gross income in 2021 (the same as last year). Post tax-reform, itemized filers could make a maximum charitable donation deduction that ranged from 20% up to 60% of AGI on cash donations. That has temporarily increased to 100% in 2020 and 2021, when made to a qualified organization. If you give more than your AGI, the excess deduction amount can roll over to up to 5 years, as it could previously. This elevated maximum donation amount decreases in 2022 back to 2019 levels (60% for cash donations).

What Documents Are Needed for the Deduction?

Ask for and hold onto a charitable donation receipt if you do not automatically receive one at the time of donation.

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