In a September 17 letter, the Internal Revenue Service explained how both individuals and businesses may receive additional benefits for charitable gifts this year. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 included four temporary tax benefits to encourage charitable gifts. These benefits include deductions for individuals who do not itemize, a 100% AGI limit for itemized charitable cash gifts by individuals, increased corporate charitable deductions and increased limits for businesses that donate food inventory.
1. Non-itemizer Taxpayers Because the Tax Cuts and Jobs Act of 2017 dramatically increased the standard deduction, almost 90% of taxpayers do not itemize. At one time, taxpayers who did not itemize could not use the benefits of a charitable deduction. However, for 2021, the CARES Act made it possible to deduct cash gifts up to $300 for an individual or $600 for a married couple filing jointly. These additional deductions are available for taxpayers who take the standard deduction.
There are some limits on the $300 or $600 deduction for nonitemizers....More