The Internal Revenue Service has a special tax provision regarding charitable contributions that allows the maximum (up to $600) for married individuals filing joint returns. Individual tax filers, including married individuals filing separate returns can easily deduct up to $300 for cash contributions made to qualifying charities during 2021.
Individuals who choose to take the standard deduction, usually cannot claim a deduction for their charitable contributions. A temporary law change now permits them to claim a limited deduction on their 2021 federal income tax returns for cash contributions made to qualifying charitable organizations. Nearly nine in 10 taxpayers now take the standard deduction and could potentially qualify.
Cash contributions include those made by check, credit card or debit card as well as amounts incurred by an individual for unreimbursed out-of-pocket expenses in connection with their volunteer services to a qualifying charitable organization. Cash contributions don’t include the value of volunteer services, securities, household items or other property.
Special recordkeeping rules apply to any taxpayer claiming a charitable contribution deduction. Usually, this includes obtaining an acknowledgment letter from the charity before filing a return and retaining a cancelled check or credit card receipt for contributions of cash.