In 2020 lawmakers put in place several provisions that allowed for additional tax benefits for individuals and businesses making charitable donations.
As in 2020, the following tax benefits are in place:
• Taxpayers who do not itemize can claim a deduction of up to $300 for cash contributions to qualifying charities (or $600 for married individuals filing joint returns).
• Taxpayers who itemize have a 100% limit on eligible cash contributions. This limit was previously 20%-60% of their AGI and varied, depending on the type of contribution or charity.
• C-Corporations are now permitted to apply an increased corporate limit of 25% of taxable income for charitable cash contributions to eligible charities. NOTE: This limit is not automatic and must be chosen on a contribution-by-contribution basis.
• Businesses donating food inventory that are eligible for the existing enhanced deduction may qualify for increased deduction limits. A special method for computing the enhanced deduction continues to apply, as do food quality standards and other requirements.
If you have questions about how these new guidelines apply to your particular tax situation, please feel free to reach out to your accountant at 614-891-5423. You can also read more details here.