As the COVID-19 pandemic continues to impact the lives of low-income families and children, end-of-year donations are more critical than ever to supporting the important work of nonprofit organizations such as Operation Warm. And this year, charitable gifts come with a bonus: expanded tax benefits. These provisions extend several temporary tax changes from the CARES Act of 2020 that encourage individual taxpayers and businesses to donate to qualifying charities.
Here’s what you need to know as you plan your end-of-year charitable giving this December:
If you don’t itemize, you can still claim a deduction
In the past, taxpayers who took the standard deduction could not itemize their donations. This year, they can claim a deduction of up to $300 (or $600 for a married couple filing jointly) for cash contributions made to qualifying charities. About 90 percent of households take the standard deduction and could potentially be eligible for the tax break, the IRS said. This is in addition to the standard deduction, offering a nice break for individuals and families who choose to donate to a charitable organization this year.
If you itemize, you can apply up to 100% of your AGI for qualifying contributions
Typically, taxpayers who itemize can claim a deduction for charitable contributions of 20% to 60% of their adjusted gross income (AGI), depending on the type of donation and charity. This year, the limit has been increased to 100%, helping generous donors to maximize their giving.
The corporate limit is 25% of taxable income
C corporations may apply an increased corporate limit of 25% of taxable income for cash contributions made to eligible charities in 2021. This offers a great reason to donate to one or more organizations that are doing good work in the communities your business serves.
At Operation Warm, we put every penny of every donation into our mission, with 95 cents of every dollar spent directly on the children we serve: equipping them with warm coats and shoes that make it possible to attend school on cold days, play outside safely, and experience the pride of wearing new, well-fitting apparel. When kids have the attire they need to attend school consistently, they not only gain the benefits of education but receive nutritious meals, wellness check-ins, and access to confidence-building extracurricular activities. In other words, our donors help us give so much #MoreThanACoat.
We realize that gifting to a charity is not something everyone can afford and that many worthy appeals find their way to mailboxes and inboxes this time of year. However, we’re hopeful that the extra tax benefits available in 2021 will inspire more donors to consider supporting the vital work of organizations such as Operation Warm. Our wish list for coats and shoes continues to grow, and with donors’ generous end-of-year gifts, we’ll be ready to serve more kids than ever during our 2021-22 coat season. We hope you will consider giving what you can this year!