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Charitable giving for your 2021 tax year

by Kristin P. Sinclair – A Accu Tax – May 6, 2021

For Tax Year 2021 Gifts to Charity has a whole new potential that so many more folks can benefit from when they complete their tax return. Even when you do not itemize, it is possible to get some tax advantages from giving to certain charities.  When you do itemize that to is possible.

You gift one of your favorite charities let’s say you have special place in your heart for the great work being done by,  Feeding America and the gift of cash in the form of the check you send along with your written statement.  Your check is for $150.00. You want to have a record. And of course when you are sent your thank you letter acknowledging the gift you keep that acknowledgment letter for your tax files. Write your check number on the acknowledgment as well.

You also have some other favorite charities and You have decided to donate to your Nature Conservancy charity, and in turn for your donation they are going to send you a reusable bag that you intend to take on your grocery shopping trips along with you other reusable bags. You send your cash gift in the form of a check to Nature Conservancy in the amount of $100.00 and they send you the reusable bag that you get to display each time you use that bag. If you simply keep the bag in a safe place that too is okay.  That non profit logo design bag; that they have valued at $10.00 along with your thank you acknowledgment is still your gift to say thank you for being generous.

$100.00 less $10.00 = $90.00 and your actual charitable gift to

Nature Conservancy is $90.00 because you received a $10.00 thank you gift, in exchange for your generosity.  

Thus far you have gifts to charity of $240.00.

You also have a charity called Union of Concerned Scientists that you feel does good work keeping businesses and politicians held accountable for choices put into action. Keep stories in front of the public eye, looking out for issues that are important to you. You choose to send your cash gift along with your written statement for the amount of $100.00. You receive a calendar valued at say $15.00 and they do some outreach work to congress, which they indicate is valued at say $25.00.  In this case being used as an example: $100.00 – $15.00 – $25.00 = $60.00. So your charitable gift is $60.00.

So now you have charitable gifts amounting to $300.00.

When the tax payer is a Single or a Married Filing Separately tax payer , the charitable giving that you made during tax year 2021 can be taken as an adjustment to income even though you might not itemize, up to the amount of that $300.00 figure.  You need to keep your proof and you need to keep this information used on your tax return with those tax return documents that you will keep in a safe place in the event you have a need to substantiate your charitable giving. Or any reason that you might have to pull out that tax return.

For the Married Filing Jointly Tax paying couple You can actually benefit from those gifts to charity which are considered cash contributions you made to your charities of choice up to an amount of $600.00 when you do not itemize on your return.

A single tax payer up to $300.00 as an adjustment, the married filing jointly couple can benefit from up to $600.00 as an adjustment to income regarding what falls into the classification of qualified cash contributions.

For the tax payer who does itemize and utilizes the Schedule A, they will not take the adjustment to income, they will instead list each gift to charity on the itemized deduction portion that is used for charitable giving tabulations.  Which is the portion of the tax return where someone who intends to itemize. When a taxpayer itemizes their charitable giving they also be able to include their non cash gifts to charities.  You know that receipt you are offered when you have brought that closet full of clothes that are in good or better condition. But you know that you do not intend to wear any of those clothes again. For the folks who do intend to itemize accept that receipt with a smile and attach your already prepared list of items to that receipt.

Benefit from potentially significant medical care out of pocket expenses, and their mortgage interest paid, and state taxes paid on their home and their vehicles, and the gifts to charities and their non cash gifts to charities you want to have that list of the items donated. And the value at purchase and the value to the charity at time of donation. And attach that list to the receipt you are given. Because later when it is time to provide your documents to your tax preparer, it is unlikely that you will accurately remember what you actually gave in the form of non cash gifts.  And that list you put together when you were gathering items from the closet will have been something that you have really appreciated that you were so well prepared to provide your tax preparer.  Since only you will have a good idea of what you pay for items when you purchase them, it is up to you to provide that detail. And since only you know if the items are in good or better condition, or like new condition, it is also up to you to provide that detail as well .Your tax preparer can print out a list to use as a guide to determine values of non cash contributions. And then you can do your computer research on that complete set of china you inherited that has to be hand washed and you have no desire to put that china in a china cabinet that you do not have nor do intend to make part of your floor plan design.

And some things you simply need to get appraised when there are a truly valuable item. To have a written substantiated document by the appraiser to support your position.  

And then of course one of these days the ladies bake sales group effort will return,  and the mens special club interest to raise funds for the special efforts will return. The organization has taken to heart and supports with joyful monthly meeting will return. And you go to the store and purchase your baking supplies. To make the famous recipe that you have become known for making. Or gather that lumber and nails to help someone with a new ramp, your men’s club via the recognized charitable club has taken on a new mission to help those in need. You club has seasoned bakers, and your club has retired craftsmen who love helping others and and occasionally testing their trade skills and keeping fresh and learning new skills from the new guy who moved to your area from a different region. Everyone has fun, everyone helps others and everyone learns a new skill from someone else.  

You paid good honest money for those supplies so that the federal qualified charitable organization via its member could do their good works. So the group or the club,  could achieve the results desired.  It is a gift to the recognized charity making these things possible. So yes, keep that store receipt, make a copy of it, and get the master arm of the charity, such as the church and church secretary  a copy and ask to have that amount added to the list of items you have given during the years annual period, they should be able to include the line items accordingly.  You will be grateful,  that you made it so easy for the bookkeeper to add that amount to your annual giving statement.  You just made completing your itemized deduction much easier. And you will have the proper documentation needed.

Updated by Kristin P Sinclair

A Accu Tax

Rock Hill, SC

May 6, 2021

803-329-0615    

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